BIGGER BETTER

M1 K1

ANNUAL REPORT

2019-2020

BIGGER

BETTER

EMPOWERING OUR CUSTOMERS BY ENABLING

-TECH SOLUTIONS FOR A SECURED TOMORROW

2 13th Annual Report 2019-20

M2 K2

Values that empower

us for the future

Sensitivity

We will build our business on empathy and an

inherent understanding of both our internal and

external customers' needs.

Ethics

We will honour our commitments and be

transparent in our dealings with all our

stakeholders.

Excellence

We will always strive to offer innovative products and

services and endeavour to set new benchmarks to do

things better each time.

Dynamism

We will be pro-active with a “can do” approach.

Annual Report 2019-2020

M3 K3

Company Highlights

Message from the Chairman

Message from the CEO

Board of Directors

Brief Profile of the Directors

Directors' Report

Independent Auditors' Report

Balance Sheet

Profit & Loss Account

Receipts and Payments Account

Revenue Account

Schedules

Management Report

Glossary

Our Products

Customer Testimonials

Awards and Recognition

129

137

139

140

142

Contents

4 13th Annual Report 2019-20

M4 K4

Company Highlights

pany Hig

ghlights

largest General Insurance Company in private sector.

Overall market share of 6.2% for Fiscal Year 2019-20 considering

full year business of HDFC ERGO Health Insurance and HDFC ERGO.

Comprehensive product portfolio along with a balanced channel

mix.

Credit rating of ICRA/AAA & CRISIL/AAA with a stable outlook for

the Non-Convertible Debentures (Subordinated Debt) programme.

Solvency ratio of 178% vis-a-vis IRDAI required solvency ratio of

150%.

PAN-India presence across 203 branches and a close knit family of

7,800 professionals.

ISO certified processes for Claims Services, Operations and

Customer Services and Business Continuity Management.

Issued more than 10 million policies and serviced more than 1.5

million claims in FY20.

M5 K5

Chairman's Message

In FY20, the merger of HDFC ERGO and

HDFC ERGO Health created the country’s

second largest private health insurer.

Deepak S. Parekh

Chairman

Like the previous year, the year under review has been a mixed bag seeing the economy slow down further in the second half. The Government

undertook various measures to boost economic growth in FY20 – such as reduction in corporate income tax rate, reduction in interest rates,

merger of public sector banks, re-capitalization of public sector banks, etc. Nevertheless, the growth momentum continued to be slow throughout

FY20, primarily on account of lower gross fixed capital formation, weak private consumption and investment. The primary motor vehicle sales saw

a de-growth of 18% during the year. The overall sentiments were also weak in the last quarter given the outbreak of COVID-19 which started

impacting the global economies and our exports. The economy grew by 4.2% in FY20 as compared to 6.1% in FY19.

In FY21, the economic situation across the world is expected to remain muted on account of lower global demand arising out of the Covid-19

pandemic. The COVID-19 crisis brought the economic activity in the country to a virtual stand-still in the first few months of the new fiscal. To

contain the pandemic in India, the Government acted swiftly. The lockdown in Quarter 1 has helped contain the spread of COVID-19, potentially

saving millions from getting impacted by the virus and slowing the rate of spread of the pandemic. At the same time, the Government and RBI

has taken measures to improve liquidity and shield the domestic economy from the potential effects of the pandemic. Nevertheless, Indian

economy is expected to de-grow in FY21 even if we are able to stage a sharp recovery starting Q3. Uncertainty around Covid-19, lower domestic

demand and higher volatility in global financial markets continue to be downside risks to domestic economic activity.

The General Insurance Sector grew

by 11.7% in FY20 (~13% in FY19), taking the industry premium to ~`189,000 crore. During the year, the Motor

segment witnessed a muted growth due to the sharp de-growth in primary vehicle sales, while the Accident and Health segment grew by 11.5%.

With the objective of growing its presence in the health insurance sector, HDFC acquired 51.2% of Apollo Munich Health Insurance Company Ltd.

[renamed as HDFC ERGO Health Insurance Limited (‘HDFC ERGO Health’)] in January 2020. Subsequently, after receiving approvals from the

National Company Law Tribunal (NCLT) and the Insurance Regulatory and Development Authority of India (IRDAI), HDFC ERGO Health was merged

with HDFC ERGO with Appointed Date as March 1, 2020. The merged entity, HDFC ERGO, shall leverage the best practices of both the companies.

It shall be among the leading private insurers in India with a 6.2% market share in FY20 considering full year business of both companies, and

shall have a strong presence in the health insurance sector.

In line with the HDFC Group’s core values of trust, integrity and transparency, the Company takes pride in servicing its 14 million+ customers. The

Company continues to be at the forefront of various digital initiatives to ensure faster and best in class customer service delivery using artificial

intelligence and robotics in various aspects of its processes. The Company has ensured that all its customers continue to be serviced seamlessly

during the lockdown period though all employees were working from home.

In FY20, the IRDAI announced various regulatory changes to simplify and improve the access of health insurance to potential customers including

instalment facilities for premium, standardization of exclusions and introduction of Arogya Sanjeevani Policy, an indemnity health insurance

product with uniform coverages and standardized terms & conditions across the industry.

The General Insurance Sector continues to witness entry of new promoters. The various regulatory

amendments aimed at development of the industry, increasing competitive intensity and widespread

adoption of digital initiatives are expected

to result in a more comprehensive set of insurance solutions and

deeper insurance reach. These factors should help significantly improve the level of insurance penetration.

I ta

ke this opportunity to thank all the stakeholders for their support to the Company, and look forward to

the continued support in the coming years.

6 13th Annual Report 2019-20

M6 K6

MD & CEO's Message

Including HDFC ERGO Health,

HDFC ERGO’s market share increased

from 5.1% in FY19 to 6.2% in FY20.

While the stable political situation continued in FY20, the growth momentum of the domestic economy slowed down further in FY20, with the

real GDP growth at 4.2% in FY20 compared to the 6.1% growth in FY19. The Covid-19 pandemic and the resultant lockdown is likely to result in

a de-growth in FY21.

The growth of the non-life industry is directly linked to the economic growth, and this was reflected in the industry performance for FY20. The

general insurance industry wrote gross direct premium of ~`189,000 crore, registering a growth of 11.7% (FY19: 12.9%). The de-growth in auto

sales, which had started in the second half of FY19, continued throughout FY20, registering a de-growth of 18.0%. As a result, despite an

improvement in penetration and FY20 being the first full financial year under the long term motor policies regime, the motor segment registered

a growth of only 7.3%. Owing to revision in premiums for certain categories of risks, the Corporate segmentled the industry growth with a 17.6%

growth, and the Accident & Health segment grew by 11.5%. Thus, the non-crop segments registered a growth of 10.7%. The crop insurance

segment grew by 16.9%.

Private sector insurers (including standalone health insurers) grew by 13.9%, capturing further market share from the public sector insurers

(including specialized insurers), who registered an 8.9% growth. In FY21, we expect a general slowdown in the first half of the financial year linked

to the slowdown of the domestic economy, and the recovery in the second half would be witnessed across the Motor, Accident & Health and

Corporate segments.

Further to HDFC’s acquisition of majority stake in Apollo Munich Health Insurance Company Ltd., it was renamed to HDFC ERGO Health Insurance

Limited (‘HDFC ERGO Health’). HDFC ERGO Health (previously Apollo Munich) is one of the leading private sector health insurers in India, with a

domain expertise in health insurance and wide network of 98,000+ agents across the country. Thereafter, HDFC

ERGO Health was merged into

HDFC ERGO after receiving the necessary regulatory approvals.

I am confident that the customers of both companies shall benefit from this merger. Th

ey would be able to access the combined product bouquet

of both companies and the ‘best of both’ in terms of service delivery and digitization. HDFC ERGO customers will have access to the health

insurance offerings of HDFC ERGO Health, and HDFC ERGO Health customers will have access to the wider general insurance solutions of HDFC

ERGO. Further, our customers and partners will benefit from our deeper geographical reach – our presence has expanded from 129 physical

offices to 203 physical offices post-merger.

While the industry witnessed pricing pressure amidst increasing competitive intensity, we continued to pursue our calibrated risk selection

strategy, and we achieved a 14.7% growth in the non-crop segments in FY20, in line with the industry. In line with our portfolio strategy, our crop

portfolio remained flat at `2,163 crore. Thus, our Gross Written Premium grew by 11.9% during the year, from `8,722 crore to `9,760 crore.

Like the recent years, FY20 also witnessed multiple catastrophic events (to name a few, floods in Kerala, Karnataka and Cyclone Fani of Odisha).

Our portfolio steering measures and focus on operational efficiencies could partly offset the negative impact of catastrophic events. Therefore,our

combined ratio before the impact of certain changes in accounting policy and estimates increased to 101.4% as compared to 98.7% for FY19.

Our profit before tax excluding this impact increased from `467 crore to `689 crore.

The accounting practices of HDFC ERGO Health were aligned with HDFC ERGO on merger, which had an adverse impact of

`230 crore on the

profit before tax of the Company. The major change was the change in method for making reserves for Unexpired Risk – HDFC ERGO Health was

following the 50% of Net Written Premium method as against the 1/365 method followed by HDFC ERGO. On merger, the change in reserving

method, to align with that of HDFC ERGO, had an adverse impact of `

228 crore on the profit before tax of the Company. Considering all these

impacts, the Company achieved profit after tax of `327 crore as compared to `383 crore last year and a combined ratio of 105.3%.

M7 K7

Ritesh Kumar

MD & CEO

During the year, your Company sold over 10 million policies. The claims settlement processes were further streamlined with rule-based and

automated approval systems to provide best-in-class experience to the customers in terms of claims settlement ratio and turnaround times.

Your Company has been launching various customer-centric initiatives over the past few years, be it in terms of increased digitisation, adoption

of innovative technologies or process improvements. These came to the fore during the Covid-19 outbreak. Like the rest of the country, we were

working from home and had to ensure that the customer service continues without disruption. The ‘Digital First’ approach we adopted few years

ago enabled our customers to reach out to us through easily accessible digital platforms, including our Website, Self Help Portal, DIA (chatbot),

WhatsApp Business Chat, mobile app – all of which allowed customers to connect with us and helped in fulfilling their service requests. Apart

from informing our customers about various service requests which could be fulfilled digitally, we also launched specific initiatives during the

lockdown such as spreading awareness about Covid-19 via e-mailers, allowing motor renewals through customer self-inspection, prioritising

pre-authorisation and discharge requests in health claims, etc. As a result, we were able to deliver consistently high quality service even during

the lockdown phase without compromising on the safety of our employees and channel partners. We ensured increased adoption of our digital

tools by agents for sales and service so that they can stay indoors and yet procure business or service customers.

I am pleased to further inform that the financial statements of your Company for the year ended on March 31, 2019 have been awarded Silver

shield for Excellence in Financial Reporting by the Institute of Chartered Accountants of India for the accounting policies applied and practices

adoptedfor disclosures and presentation for preparation of financial statements. This is the 6th time in last 8 years that your Company

has

received this award from the Institute of Chartered Accountants of India.

I take this opportunity to thank all our stakeholde

rs for the contribution made in this challenging business environment and look forward to their

continued support.

8 13th Annual Report 2019-20

M8 K8

HDFC ERGO General Insurance Company Limited.

A subsidiary of Housing Development Finance Corporation Limited.

Registered & Corporate Office: HDFC House, 1

Floor, 165-166, Backbay Reclamation, H. T. Parekh Marg, Churchgate, Mumbai - 400 020.

Website: www.hdfcergo.com | E-mail: [email protected] | Tel. No. : +91 22 6638 3600

CIN: U66030MH2007PLC177117. IRDAI Reg. No. 146.

Customer Experience Management, Customer Happiness Center: D-301, 3

Floor, Eastern Business District (Magnet Mall), LBS Marg,

Bhandup (West), Mumbai 400 078. Customer Service No.: 022 - 6234 6234 / 0120 - 6234 6234 | [email protected] | www.hdfcergo.com

Board of Directors

Senior Management

Company Secretary Appointed Actuary

Mr. Hiten Kothari

Auditors Debenture Trustee Bankers

HDFC Bank Ltd.

Mr. Deepak S. Parekh

Chairman

(DIN: 00009078)

Directors

Mr. Keki M. Mistry

(DIN: 00008886)

Ms. Renu Sud Karnad

(DIN: 00008064)

Dr. Oliver Martin Willmes

(DIN: 08876420)

(w.e.f October 12, 2020)

Dr. Clemens Matthias Muth

(DIN: 07824451)

(w.e.f October 12, 2020)

Mr. Alexander Ankel

(DIN: 07798908)

(upto October 11, 2020)

Mr. Theodoros Kokkalas

(DIN: 08093899)

(upto October 11, 2020)

Mr. Bernhard Steinruecke

(DIN: 01122939)

Mr. Mehernosh B. Kapadia

(DIN: 00046612)

Mr. Arvind Mahajan

(DIN: 07553144)

Mr. Ameet P. Hariani

(DIN: 00087866)

Mr. Samir H. Shah

Executive Director & CFO

(DIN: 08114828)

Mr. Anuj Tyagi

(Executive Director & CBO)

(DIN: 07505313)

Mr. Ritesh Kumar

Managing Director & CEO

(DIN: 02213019)

Mr. Ankur Bahorey

Mr. Parthanil Ghosh

Mr. Sanjay Kaw

Mr. Mehmood Mansoori

Mr. Anurag Rastogi

Mr. Ravi Vishwanath

Mr. Dayananda V. Shetty

Membership No.: FCS 4638

G. M. Kapadia & Co.

Chartered Accountants

B. K. Khare & Co.

Chartered Accountants

IDBI Trusteeship Services Limited

Asian Building, Ground Floor,

17, R. Kamani Marg, Ballard Estate,

Mumbai – 400 001

Tel. No: +91 22 40807062

Fax No: +91 22 22882312

M9 K9

Brief Profile of the Directors

Mr. Deepak S. Parekh (DIN: 00009078) is the Chairman of the Company and its holding company - Housing

Development Finance Corporation Limited (HDFC), India’s premier Housing Finance Company. He is a fellow of The Institute

of Chartered Accountants (England & Wales). He joined HDFC in a senior management position in 1978. He was inducted as

a Whole-time Director of HDFC in 1985 and subsequently appointed as the Managing Director (designated as 'Chairman') in

1993. He retired as the Managing Director of HDFC on December 31, 2009. He was appointed as a Non-Executive Director of

HDFC with effect from January 1, 2010. Mr. Parekh has been honored with several awards and accolades viz. Padma

Bhushan, one of the highest civilian awards, by Government of India in 2006, ‘Bundesverdienstkreuz’ Germany’s Cross of the

Order of Merit, one of the highest distinction by the Federal Republic of Germany in 2014, Knight in the Order of the Legion of

Honour, one of the highest distinctions by the French Republic in 2010, first of a network of international ambassadors for

championing London across the globe by the Mayor of London in 2017 and First international recipient of the Outstanding

Achievement Award bythe Institute of Chartered Accountants in England and Wales, in 2010 and 'Lifetime Achievement

Award' at CNBC TV18’s 15

India Business Leader Awards, 2020.

Mr. Keki M. Mistry (DIN: 00008886) is a Non-Executive Director of the Company. Mr. Mistry is the Vice Chairman & Chief

Executive Officer of Housing Development Finance Corporation Limited (HDFC). He is a fellow of The Institute of Chartered

Accountants of India. He was a member of the Committee of Corporate Governance set up by the Securities and Exchange

Board of India (SEBI). He is currently the Chairman of CII National Council on Corporate Governance and a member of Primary

Markets Advisory Committee set up by the SEBI. He joined HDFC in 1981 and was appointed as the Executive Director in

1993, as the Deputy Managing Director of HDFC in 1999 and as the Managing Director in 2000. He was re-designated as the

Vice Chairman & Managing Director of HDFC in October 2007 and as the Vice Chairman & Chief Executive Officer with effect

from January 1, 2010.

Ms. Renu Sud Karnad (DIN: 00008064) is a Non- Executive Director of the Company. Ms. Karnad is the Managing

Director of Housing Development Finance Corporation Limited (HDFC). She holds a Master’s degree in Economics from the

University of Delhi and is a graduate in law from the University of Mumbai. She is a Parvin Fellow – Woodrow Wilson School

of Public and International Affairs, Princeton University, U.S.A. She joined HDFC in 1978 and was appointed as the Executive

Director in 2000 and was re-designated as its Joint Managing Director in October 2007 and thereafter appointed as its

Managing Director w.e.f. January 1, 2010. Ms. Karnad is currently the President of the International Union for Housing Finance

(IUHF), an association of global housing finance firms.

Dr. Oliver Martin Willmes (DIN: 08876420) is a Non-Executive Director of the Company. He has studied Business

Administration at the University of Cologne. Dr. Willmes has done MBA from Eastern Illinois University, USA. Dr. Willmes is

currently the Chairman of the Board of Management and Chief Operating Officer at ERGO International AG.

Dr. Clemens Matthias Muth (DIN: 07824451) is a Non-Executive Director of the Company. He has studied Economics

at the Universities of Mainz and Munich. He has done Doctorate in Economics from Munich University. He is currently the

Chairman of the Board of Management of DKV Deutsche Krankenversicherung AG and also a Member of the Board of

Management of ERGO Group AG responsible for all lines of Insurance.

Mr. Bernhard Steinruecke (DIN: 01122939) is the Director General of Indo-German Chamber of Commerce. He studied

Law and Economics in Vienna, Bonn, Geneva and Heidelberg and has a Law Degree from the University of Heidelberg in 1980

(Honours Degree) and passed his Bar exam at the High Court of Hamburg in 1983. Mr. Steinruecke was the former Co-CEO of

Deutsche Bank India and Co-Owner and Speaker of the Board of ABC Privatkunden-Bank, Berlin. Mr. Steinruecke was

appointed as an Independent Director of the Company for a period of 5 years w.e.f. September 9, 2016.

10 13th Annual Report 2019-20

M10 K10

Mr. Arvind Mahajan (DIN: 07553144) is an Independent Director of the Company. He is a graduate (B.Com. Hons) from

Shriram College of Commerce, Delhi University and has a Post Graduate Diploma in Management from IIM, Ahmedabad.

Mr. Mahajan has more than 35 years’ experience in management consulting and industry. His management consulting

experience includes more than 22 years as partner with AF Ferguson & Co, Price Waterhouse Coopers, IBM Global Business

Services and most recently with KPMG. His industry experience was with Procter and Gamble in financial management and

management reporting.

In his career at KPMG India, he has lead business consulting services and later the Energy, Infrastructure, Government and

Healthcare practices of the firm. He also had the privilege of being member of KPMG's Global Business Consulting and Global

Infrastructure Sector Leadership teams. His specialization is in advising CEOs & Boards in area of business strategy and

helping "make strategy happen" through growth and transformation initiatives. He also has strong background in corporate

finance, enterprise risk management and people and change. He has advised clients in a diversified portfolio sectors

including consumer, financial services, technology, media, telecom, energy, infrastructure & government.

Mr. Mahajan has strong understanding of technology including disruptive trends. While at IBM, he has lead technology

strategy and the communication sector vertical. He has also been member of KPMG’s Global Think Tank, which was involved

in identifying disruptive trends and developing the long term strategy for the firm. Mr. Mahajan was appointed as an

Independent Director of the Company for a period of 5 years w.e.f November 14, 2016.

Mr. Samir H. Shah (DIN: 08114828) is a Fellow member of The Institute of Chartered Accountants of India (FCA), an

Associate member of The Institute of Company Secretaries of India (ACS) and The Institute of Cost Accountants of India

(ACMA). He joined the Company in 2006 and has about 29 years of work experience, of which over 13 years in the General

Insurance sector. Mr. Shah is the Executive Director of the Company appointed for a period of 5 years with effect from June 1,

2018 and is currently responsible for Finance, Accounts, Tax, Secretarial, Legal & Compliance, Risk Management, Internal

Audit, Fraud Control & Investigation, Administration and CSR functions of the Company.

Mr. Anuj Tyagi (DIN: 07505313) is a Chemistry (H) graduate and has a Post Graduate Diploma in Business Management.

He has been the Executive Director & CBO of the Company from May 1, 2016. Mr. Tyagi has about 20 years of work experience

in Insurance and Banking. He joined the Company in 2008 as Head – Corporate Business Group. Mr. Tyagi was appointed as

the Managing Director & CEO of HDFC ERGO Health Insurance Limited with effect from January 9, 2020 while continuing as

a Non-Executive Director of the Company. Pursuant to merger, Mr. Tyagi has been appointed as Executive Director & CBO of

the Company for a period of 5 years w.e.f November 13, 2020.

Mr. Ritesh Kumar (DIN: 02213019) is the Managing Director and CEO of the Company since 2008. Mr. Kumar has about

28 years of experience in the Financial Services Industry, of which the first 10 years were in Banking and the last 18 years in

Insurance. Mr. Kumar is a commerce graduate from Shriram College of Commerce, Delhi and holds a MBA degree from

Faculty of Management Studies (FMS), Delhi.

Mr. Mehernosh B. Kapadia (DIN: 00046612) holds a Master’s degree in Commerce (Honours) and is a Member of The

Institute of Chartered Accountants of India and The Institute of Company Secretaries of India. Most of his corporate career of

34 years has been with GlaxoSmithKline Pharmaceuticals Limited (GSK) where he has worked for over 27 years. He retired

as the Senior Executive Director and Chief Financial Officer of GSK w.e.f. December 1, 2014. Over the years, he has been

responsible for an extensive range of finance and company secretarial matters. He has also held management responsibility

for other functions during his tenure with GSK, including Investor Relations, Legal and Compliance, Corporate Affairs,

Corporate Communications, Administration and Information Technology, and held the position of Company Secretary for

many years. Mr. Kapadia was appointed as an Independent Director of the Company for a period of 5 years w.e.f. September

9, 2016.

Mr. Ameet P. Hariani

(DIN:00087866), has over 32 years of experience advising clients on corporate and commercial

law, mergers and acquisitions, real estate and real estate finance transactions. He has represented large organizations in

international real estate transactions, arbitrations and prominent litigations.He was a partner at Ambubhai and Diwanji,

Mumbai and Andersen Legal India, Mumbai. He is the Founder and Managing Partner of Hariani & Co. since the year 1991.

He holds Law degree from Government Law College, Mumbai and Masters in Law degree from the University of Mumbai. He

is a Solicitor enrolled with the Bombay Incorporated Law Society and the Law Society of England and Wales. He is also a

member of the Law Society of Singapore, the Bar Council of Maharashtra and the Bombay Bar Association. Mr. Hariani was

appointed as an Independent Director of the Company for a period of 5 years w.e.f July 16, 2018.

M11 K11

Directors’ Report

TO THE MEMBERS

Your Directors are pleased to present the Thirteenth

Annual Report of your Company together with the audited

financial statements for the financial year ended on

March 31, 2020.

Merger of HDFC ERGO Health Insurance Limited

(Transferor Company) with the Company

During the year, pursuant to receipt of approvals from the

Competition Commission of India (CCI), Reserve Bank of

India (RBI) and the Insurance Regulatory and Development

Authority of India (IRDAI), Housing Development Finance

Corporation Limited (HDFC Limited), the holding

company of the Company, acquired 51.16% of the paid

up share capital of Apollo Munich Health Insurance

Company Limited (AMHI) (Transferor Company) from its

Indian Promoters, Apollo Hospital Group and few other

shareholders.

The acquisition was completed on January 9, 2020 and

AMHI became a subsidiary of HDFC Limited. The name

of AMHI was changed to HDFC ERGO Health Insurance

Limited (HEHI).

The Board at its meeting held on January 15, 2020

approved the Scheme of Amalgamation (the Scheme) for

merger of HEHI with the Company with Appointed Date as

March 1, 2020. On February 17, 2020, Company Scheme

Application (CSA) was led with the National Company Law

Tribunal, Mumbai Bench (NCLT) under the provisions of

Sections 230 to 232 of the Companies Act, 2013 read

with the Companies (Compromises, Arrangements and

Amalgamations) Rules, 2016.

The CSA was heard by the NCLT on April 30, 2020. While

admitting the application, the NCLT had dispensed

with the issuance of notice or convening of meeting of

equity shareholders or unsecured creditors (including

debentureholders). NCLT has directed issuance of notices

to the Statutory Authorities and accordingly the notices

have been sent to the Statutory Authorities. Thereafter the

Company Scheme Petition (CSP) was led with the NCLT

on June 18, 2020. NCLT at its hearing held on September

7, 2020, admitted the CSP and xed September 29, 2020

as the nal date for hearing.

At the said nal hearing held on September 29, 2020, NCLT

sanctioned the Scheme under Sections 230 to 232 of the Act

providing for merger of HEHI with the Company. The certied

copy of the Order was received on November 13, 2020.

In terms of the provisions of Regulation 8 of IRDAI (Scheme

of Amalgamation and Transfer of General Insurance

Business) Regulations, 2011, on October 8, 2020,

application was submitted to IRDAI seeking its final

approval for the merger

IRDAI vide its letter dated November 11, 2020 gave its

nal approval for the merger of HEHI with the Company.

The Effective Date of merger is November 13, 2020.

Pursuant to the said approvals, the entire undertaking of

HEHI including but not limited to all assets, properties,

liabilities, contracts, employees, legal and other proceedings

have been transferred to and vested in the Company on a

going concern basis, with effect from the Appointed Date.

As provided under the Scheme, on November 13, 2020,

the Board of Directors allotted Shares of the Company

to the Shareholders of HEHI, in the ratio of 100:385 i.e.

one hundred fully paid up equity shares of face value

` 10 each of the Company for every three hundred and

eighty ve fully paid up equity shares of face value ` 10

each held in HEHI.

Mr. Anuj Tyagi, Executive Director & Chief Business Ofcer

of your Company was appointed as the Managing Director

and CEO of HEHI w.e.f. January 9, 2020 while continuing

as a Non-Executive Director of the Company. Pursuant

to the merger, the Board of Directors at its meeting held

on November 13, 2020, approved the appointment of

Mr. Anuj Tyagi, as a Whole-time Director (designated as

Executive Director & Chief Business Ofcer) for a period

of 5 (ve) years, with effect from November 13, 2020,

subject to the approval of IRDAI under Section 34A of the

Insurance Act, 1938.

All the information, nancial or otherwise stated in this

report is for the period of 12 months of the Company and

1 month of HEHI as the Appointed Date for merger was

March 1, 2020.

Financial Results

(` in crore)

Particulars Year ended

March 31,

2020

Year ended

March 31,

2019

Gross Written Premium 9,760.1 8,721.8

Net Written Premium 4,866.9 4,372.8

Net Earned Premium 4,450.4 3,810.0

Other Income/Liabilities

written back

4.8 6.0

Net Incurred Claims 3,524.1 2,909.2

Net Commission (Income) /

Expenses

(211.9) (152.6)

Expenses of Management 1,543.6 1,171.5

Investment Income –

Policyholders

734.9 565.8

General Insurance Result 334.3 453.7

Investment Income –

Shareholders

146.4 171.3

12 1 3 t h A n n u a l R e p o r t 2 0 1 9 - 2 0

M12 K12

(` in crore)

Particulars Year ended

March 31,

2020

Year ended

March 31,

2019

Prot before Tax - Before

providing for diminution

in value of investments &

write-off of Bad and Doubtful

Investments

480.7 625.0

Provision towards diminution

in value of investments & Bad

and Doubtful Investments

21.7 157. 8

Prot before Tax - after

providing for diminution

in value of investments &

write-off of Bad and Doubtful

Investments

459.0 467.2

Provision for Tax

103.6 84.2

MAT Credit Written Off

28.4 —

Prot after Tax

326.9 383.0

Interim Dividend (incl. Dividend

Distribution Tax)

— 164.2

Transfer to Debenture

Redemption Reserve

2.4 9.7

Prot carried to Balance Sheet

324.5 209.0

Credit balance in P & L

account at the year end

832.0 507.5

Performance

The Gross Written Premium (GWP) of the Company

increased to ` 9,760.1 crore (PY: ` 8,721.8 crore).

The net earned premium increased to ` 4,450.4 crore

(PY: ` 3,810.0 crore). The Company achieved a Prot

before Tax of ` 459.0 crore (PY: ` 467.2 crore) after

providing for diminution in the value of investments and

write-off of Bad and Doubtful Investments amounting to

` 21.7 crore (PY: ` 157.8 crore). The Prot after Tax for the

year is ` 326.9 crore (PY: `

383.0 crore).

Dividend

Considering the prevailing COVID19 situation and

advisory received from IRDAI, the Board of Directors did

not recommend any dividend for FY 2019-20 (PY: Interim

Dividend of ` 2.25 per equity share of ` 10 each).

Increase in Paid up Share capital

During the year, the Company allotted 420,000 equity

shares of ` 10 each pursuant to exercise of stock options

under Employees Stock Option Plan-2009 (ESOP-2009).

In terms of the Scheme, 105,377,232 shares were allotted

to the Shareholders of HEHI.

The Paid up equity share capital of the Company has

increased from ` 605.4 crore as on March 31, 2019 to

` 605.8 crore as on March 31, 2020 and the Share

Premium Account increased from ` 840.3 crore as on

March 31, 2019 to ` 1,395.8 crore as on March 31, 2020.

Non-Convertible Debentures

As at March 31, 2020, the Company’s outstanding Non-

Convertible Debentures (NCDs) stood at ` 350 crore

consisting of 3,500 Unsecured, Subordinated, Fully

Paid up, Listed, Redeemable NCDs of the face value of

` 1,000,000 each, with a coupon of 7.60% per annum.

The said NCDs were allotted on November 9, 2016 and

are redeemable at the end of 10 years from the date of

allotment with a call option to the Company at the end of

5 years from the date of allotment. The NCDs are rated by

CRISIL and ICRA and were assigned the highest rating of

CRISIL AAA/Stable and ICRA AAA/Stable respectively. The

NCDs are listed on the Whole Sale Debt Market Segment

of BSE Limited w.e.f. November 23, 2016.

HEHI had outstanding NCDs of ` 154 crores consisting

of 800 Unsecured, Subordinated, Fully Paid-up, Listed,

Redeemable NCDs of the face value of ` 1,000,000

each, with a coupon of 8.40% per annum allotted on

September 18, 2017 and redeemable on September 17,

2027 and 740 Unsecured, Subordinated, Fully Paid-up,

Listed, Redeemable NCDs of face value of ` 1,000,000

each, with a coupon of 10.25% per annum allotted on

September 18, 2018 and redeemable on September

17, 2028. These NCDs are also redeemable at the end

of 10 years from the date of respective allotment with

a call option to the Company at the end of 5 years from

the date of allotment. These NCDs were rated by CARE

and Acuité Ratings and were assigned the rating of AA

(Credit watch with developing implications) and AAA Stable

respectively. The NCDs are listed on the Whole Sale Debt

Market Segment of BSE Limited.

The Company has been regular in its payment obligations

towards NCDs.

Debenture Redemption Reserve

In accordance with the provisions of Section 71 of the

Companies Act, 2013 (‘Act’) read with Rule 18 of the

Companies (Share Capital and Debentures) Rules, 2014,

during the year, the Company has transferred ` 6.5 crore to

the Debenture Redemption Reserve (DRR) till the quarter

ended June 30, 2019 include ` 4.1 crore of HEHI for upto

year ended March 31, 2019.

In terms of the Companies (Share Capital and Debenture)

Amendment Rules, 2019 issued by the Ministry of

Corporate Affairs (MCA) vide its notication dated August

16, 2019, DRR is not required to be created by listed

companies in case of privately placed debentures. In view

M13 K13

of the same, the Company has stopped creating DRR w.e.f

quarter ended September 30, 2019.

As at March 31, 2020, the balance in DRR stands at

` 35.6 crore.

Extract of Annual Return

The extract of the Annual Return in prescribed Form

MGT- 9 is available on the website of the Company

(www.hdfcergo.com).

Number of meetings of the Board

During the year, the Board met six (6) times on May 3,

2019, June 19, 2019, July 24, 2019, October 23, 2019,

January 15, 2020 and January 22, 2020.

The details of attendance of the Directors at the Board

and Committee meetings are provided in the Report of

the Directors on Corporate Governance.

Policy on Director’s appointment and remuneration

The Company has in place a Board approved Policy

on Appointment of Directors and Members of Senior

Management and other Employees (Appointment Policy)

and Remuneration Policy for the Directors, Key Managerial

Personnel (KMP’s), Senior Management and other

Employees (Remuneration Policy).

The objective of the Appointment Policy is inter-alia to

provide a framework and set standards for the appointment

of high quality directors who should have the capacity

and ability to lead the Company towards achieving its

stated goals and strategic objectives, taking into account

the interest of all stakeholders including shareholders,

policyholders, channel partners and employees.

The objective of the Remuneration Policy is inter-alia to

ensure that (i) the level and composition of remuneration

is in line with other companies in the industry, sufcient to

attract and retain right talent at all levels and keep them

motivated enough to meet the organizational objectives;

(ii) a reasonable balance is maintained in the composition

of remuneration (xed and variable component); (iii) to

have performance measurement parameters in place

to assess the overall performance of Directors, KMPs,

Members of Senior Management and other employees;

and (iv) the remuneration of Whole-time Directors

including Managing Director & CEO, is xed keeping in

perspective the various risks including their time horizon

and that such remuneration reects the performance of

the Company measured against performance objectives

including risk outcomes.

The said Policies are available on the website of the

Company (www.hdfcergo.com).

Comments on Auditor’s Report

Neither the Secretarial Auditor nor the Joint Statutory

Auditors have made any qualification, reservation or

adverse remark or disclaimer in their reports. The reports

of the Secretarial Auditor and the Joint Statutory Auditors

are appended to this Report.

Further, during the year under review, the Joint Statutory

Auditors have not come across or reported any incident

of fraud to the Audit and Compliance Committee of

Directors.

Particulars of Loans, Guarantees or Investments under

Section 186

The Company has not given any loan or guarantee to any

person or body corporate.

The investments of the Company are in compliance

with the norms prescribed by IRDAI, the Guidelines

and Circulars issued by IRDAI from time to time and

the Investment Policy of the Company. The particulars

of Investment Assets are provided in Management

Discussion and Analysis Report section.

Related Party Transactions

Transactions/ arrangements by the Company in its

ordinary course of business with related parties primarily

includes sale/ purchase of insurance products, lease of

properties, wherein premium/ brokerage/ commission/

claims/ rent is received from or paid to related parties.

Audit and Compliance Committee of Directors has given

in-principle approval to enter into different types of related

party transactions which are recurring in nature and in the

ordinary course of business.

Related party transactions that were entered into during

the year were in the ordinary course of business and on an

arm’s length basis. The details of transactions with related

parties are placed before the Audit and Compliance

Committee at its quarterly meetings.

During the year under review, the Company did not enter

into any transaction or arrangement with related parties,

which were material or not at arm’s length.

There were no materially signicant transactions with the

KMP’s or their relatives that have a potential conict with

the interest of the Company at large. As per Accounting

Standard (AS) 18 on ‘Related Party Disclosures’, the

details of related party transactions entered into by the

Company are included in the Notes to Accounts.

Material changes and commitments affecting the

nancial position

There were no material changes or commitments other

than as mentioned under “Merger of HDFC ERGO Health

Insurance Limited with the Company”, affecting the

14 1 3 t h A n n u a l R e p o r t 2 0 1 9 - 2 0

M14 K14

nancial position of the Company between March 31,

2020 and the date of this report.

Particulars regarding conservation of energy, technology

absorption and foreign exchange earnings and outgo

Since the Company does not carry out any manufacturing

activity, the provisions with respect to disclosure of

particulars regarding conservation of energy and

technology absorption are not applicable to the Company.

During the year, the Company incurred an expenditure

of ` 172.2 crore in foreign exchange (PY: ` 351.7 crore)

mainly on account of reinsurance premium and claims

payment. Premium received and claims on reinsurance

ceded in foreign exchange during the year was ` 172.8

crore (PY: ` 275.2 crore).

Risk Management Framework

The Company recognizes that risk is an integral element

of insurance business and realizes the criticality of

institutionalized risk management practices to meet its

objectives. The Company has therefore established an

effective and robust enterprise wide Risk Management

Framework (RMF), which addresses all relevant risks

including strategic risk, operational risks, investment risks,

insurance risks and information & cyber security risks.

Under RMF, the Company has entrusted designated Risk

Owners to periodically identify, assess, manage and

mitigate the risks pertaining to their respective areas of

responsibility.

The Risk Management Committee of Directors (RMC) has

laid down the Risk Management Philosophy and Policy of

the Company. The RMC oversees the functioning of the

Risk Management Framework which has been designed

in line with the aforesaid Philosophy and Policy. The

Chief Risk Ofcer (CRO) is responsible for the consistent

implementation of the RMF. The CRO inter alia presents

the Key and Top risks to the RMC at its quarterly meeting.

The RMC is further assisted by a Sub-Committee comprising

of the CEO, Executive Directors, CRO and Heads of various

business units which steers the implementation of the

Company’s Risk Management Philosophy, Strategies,

Policies and Procedures.

The material risks identied by the Company and the

mitigation measures are as under:

Underwriting and Reserving Risks

Underwriting Risk is the risk of change in value due

to a deviation of the actual claims payment from the

expected amount of claims payment. Underwriting Risk

encompasses risk of concentration and insufficient

diversication.

Reserving Risk is the risk of eventual cost of claims

diverging from the booked reserves due to under-reserving

which can make certain classes of business look protable

than they really are. Conversely, over-reserving tends to

lock in unnecessary capital and could result in portfolio

steering in the wrong direction.

The following controls and mitigation measures have been

established to effectively mitigate aforesaid risks:

• The Underwriting Guidelines are used as a basis for

underwriting of risks and basis for pricing charged

to the proposer;

•

Prudent margins are built in reserves and a regular

monitoring of its adequacy is done;

•

Adequate protection is ensured through a well

designed Reinsurance program with financially

sound reinsurers;

•

Catastrophe (CAT) protection has also been ensured

to mitigate the risks of large losses arising from

probable catastrophphies;

•

Detailed Reserving Guidelines are documented for

all classes of business which dene the procedures

to be adhered to; and

•

The efcacy of the default reserve formula is reviewed

on a periodic basis to identify any signicant changes

in loss development patterns/IBNR utilization trends

and adjusted if deemed necessary and agreed by all

stakeholders.

Credit and Market Risk

Adverse change in nancial situation due to uctuation

in the market price of investment assets, its liquidity and

credit quality are some of the material risks faced by the

General Insurers.

The Company’s Investment Function is overseen by the

Investment Committee, duly assisted by the Chief Investment

Ofcer. The investments of the Company are made as per

the Board approved Investment Policy, Investment Strategy

Document and the Standard Operating Guidelines and

are compliant with the provisions of IRDAI (Investment)

Regulations, 2016 and circulars issued thereunder.

The Investment Policy and the Standard Operating

Guidelines have been designed to be more conservative

than regulatory provisions relating to investment in debt

and equity instruments.

Market risk is managed by maintaining a diversified

investment portfolio having desired mix between Debt and

Equity in accordance with the Investment Policy.

Liquidity risk is managed by maintaining investments

in money market instruments upto the desired level as

required.

M15 K15

Credit risk or risk of default of counter parties is managed

by investing a substantial portion of the investible corpus

in securities with prescribed Credit Rating (Sovereign and

AAA rated securities).

The aforementioned risks are reviewed and monitored on

a regular basis by the Management and the Investment

Committee.

Credit risk also arises on the reinsurance protection taken

by the Company. The Company ensures that it enters in to

reinsurance agreements with reinsurers who comply with

the prescribed minimum Financial Security Rating (FSR).

This minimizes its credit risk exposures in reinsurance

protection arrangements.

Operational Risks

The Company faces varied operational risks in the

various processes it operates in the course of its day to

day business such as Underwriting, Policy Administration,

Claims, Finance, Investment, Marketing, Customer Experience,

etc. Operational risks majorly arise from breakdowns in

internal processes, people and systems.

Operational risks are mitigated by developing comprehen-

sive policies and processes and by implementing both

automated and manual controls across various activities

performed by various departments.

Business Continuity risks are managed by implementing

a robust Business Continuity policy and process to ensure

continuity of key services at minimum acceptable level of

business and safety of human resources. The Company

has an alternate Disaster Recovery (DR) site and identied

critical business processes are tested periodically at the

DR site to assess its operational preparedness in the case

of any eventuality. The Company has been certied under

ISO 22301:2012 for its Business Continuity practices.

Information & Cyber Security

The Company assigns critical importance to information

and cyber security risks. Insurance business is highly

information driven where information is recognized as

a critical business asset. Due to emerging information

and cyber security threats in the Insurance Industry,

it is imperative that business information is protected

adequately through appropriate controls and proactive

measures.

To manage the existing and emerging information and

cyber security risks, following are in place:

• Board approved Information and Cyber Security

Policy;

• Board approved Information and Cyber Security

Crisis Management Plan;

• ISO 27001 Certied Information Security Management

System;

• Awareness program for employees such as awareness

mailers, simulation and tabletop exercises, classroom

trainings, etc; and

• Vulnerability Assessment and Penetration Testing

exercise on a periodic basis.

The Company has had an independent assessment done

for Capability Maturity Model Integration (CMMI) of its

Information & Cyber Security processes to benchmark its

practices against the globally recognized CMMI standard.

As per the results of the independent assessment exercise

the Company’s overall Cyber & Information Security has

been assessed as “Processes are strong, continuously

monitored and measured”.

Corporate Social Responsibility (CSR)

The Company’s CSR Policy is hosted on its

website - www.hdfcergo.com. The Policy inter-alia species

the broad areas of CSR activities that could be undertaken

by the Company, approach and process for undertaking

CSR projects and the monitoring mechanism.

The Annual Report on CSR activities, as prescribed under

Section 135 of the Act read with Rule 9 of the Companies

(Accounts) Rules, 2014 and the Companies (Corporate

Social Responsibility Policy) Rules, 2014 is appended to

this Report.

During the year, as against the required CSR spend of

` 7.25 crore, the Company spent ` 7.27 crore on CSR

activities and the same was fully disbursed during the year.

During the year, the re-construction of 3 Government

schools viz. Tandia, Varanasi, UP; Pandhiapather, Ganjam,

Odisha; Agraharam, Anantpur, AP and Community Hall of

Government school at Sarsai, Kullu, Himachal Pradesh

was fully completed.

Under Gaon Mera FY20, during the year, 3 Government

schools viz. Domabaramattur, Haveri, Karnataka;

Jamkhar, Jabalpur, MP and Mithivavdi, Patan, Gujarat

were taken for re-construction and are at various stages

of construction.

Besides the above, the Company has contributed to

furthering the cause of education of Girl Children by

sponsoring education for 34 girls. Hygiene amongst girls

has been promoted by distributing free sanitary napkins

to 10,000 girls.

The cause of health is one of our mainstays and the

Company has sponsored over 2,700 eye surgeries for

people from economically challenged backgrounds across

India. Support has been extended to children suffering

from cancer, congenital heart diseases and those needing

cochlear transplants. .

Our country is facing one of its biggest challenges in the

face of COVID 19 Pandemic. Your Company has joined

16 1 3 t h A n n u a l R e p o r t 2 0 1 9 - 2 0

M16 K16

this ght on ground by distributing essential necessities

to Government Hospitals (N 95 masks & Ventilators) and

masks and sanitizers for the Mumbai Police.

Board Evaluation

Pursuant to the provisions of the Act, the Directors have

carried out an annual performance evaluation of Individual

Directors, Board as a whole and Board Committees.

The evaluation of the Board and the Board Committees

was carried out on the basis of various parameters like

optimum mix, quality and experience of Board members,

regularity and frequency of meetings, cohesion in the

Board/ Committee meetings, constitution and terms of

reference of various Board Committees, contribution in

shaping the Company’s strategy, protecting legitimate

interest of various stakeholders, implement best corporate

governance practices, follow up on implementation of

decisions taken at Board/ Committee meetings, Board

Committee’s promptness and efcacy to report issues

requiring Board’s attention, quality, quantity and timeliness

of ow of information, etc.

The evaluation of Non-Executive Directors (including

Independent Directors) was carried out based on

parameters like attendance, active participation, exercise

of independent judgment, bringing in objectivity in

decision making process, knowledge and competency,

commitment, high levels of integrity, leadership, bringing

one’s own experience to bear on the items for discussion,

awareness and observance of governance, value addition

to the business and strategic aspects of the Company.

In addition to the above, Whole-time Directors were also

evaluated on other parameters such as involvement in

the job requirements with dedicated competence, quest

for improvement in performance, ability to function as

an effective team-member, sufficient understanding

and knowledge of the Company and the sector in which

the Company operates, understanding and fulllment

of functions assigned by the Board and the law, taking

initiative with respect to various areas.

Particulars of Employees and other related disclosures

The total employee strength of the Company as on March

31, 2020 stood at 3,899 and as on effective date 7001.

During the year, 23 employees employed throughout

the year were in receipt of remuneration of ` 1.02

crore or more per annum or ` 8.50 lakhs or more per

month. In accordance with the provisions of Rule 5(2)

of the Companies (Appointment and Remuneration of

Managerial Personnel) Rules, 2014, the names and other

particulars of such employees are set out in the annex to

the Directors’ Report.

In terms of the provisions of Section 136(1) of the Act read

with the said Rule, the Directors’ report is being sent to

the shareholders excluding the annex. Any shareholder

interested in obtaining a copy of the said annex may write

to the Company Secretary.

Further, the disclosures on managerial remuneration as

required under Rule 5(1) of the said Rules are provided in

Annexure 1 appended to the Directors’ Report.

Disclosures on remuneration of Managing Director and

Key Management Persons as mandated under IRDAI

Guidelines on Remuneration of Non-Executive Director

and Managing Director/ Chief Executive Ofcer/ Whole-

Time Director of Insurers dated August 5, 2016

(i) Qualitative Disclosures:

(a) Information relating to the design and structure

of remuneration processes and Key Features and

Objectives of the Remuneration Policy:

The Remuneration Policy provides that the level and

composition of remuneration is in line with other

companies in the industry, sufcient to attract and

retain right talent at all levels and keep them motivated

enough to meet the organizational objectives and a

reasonable balance is maintained in the composition

of remuneration (xed and variable component).

The performance measurement parameters are in

place to assess the overall performance of Directors,

KMPs, Members of Senior Management and other

Employees. The Nomination and Remuneration

Committee (NRC), whilst approving remuneration of

the Managing Director and CEO and other Whole-

time Directors, considers the above factors, which is

subject to approval of IRDAI.

(b) Description of the ways in which current and future

risks are taken into account in the remuneration

processes:

The remuneration xing process of Whole-time Directors

including Managing Director and CEO, includes

evaluation of performance against performance

objectives dened by NRC which includes performance

criteria covering the enterprise wide Risk Management

Framework.

seeks to link performance during a performance

measurement period with levels of remuneration:

The level of remuneration of Whole-time Directors

including Managing Director and CEO for any

nancial year is inter-alia linked to the following

performance objectives set by NRC:

a. Topline and bottom line targets of the Company

including portfolio steering;

M17 K17

b. Overall financial position of the Company

including adherence to IRDAI stipulations on

Minimum Solvency Margin and Expenses of

Management Limits;

c. Key strategic and operational deliverables

for the year and progress on the mid-term

deliverables;

d. Satisfactory Claim settlement and repudiation

performance;

e. Effectiveness of the Grievance Redressal

Mechanism; and

f. Overall compliance to applicable laws including

Corporate Governance Guidelines issued by

IRDAI and other statutory bodies.

(ii) Quantitative Disclosures

The following table sets forth the details of

quantitative disclosure of remuneration of Whole-

time Directors including Managing Director and CEO:

Particulars Year ended

March 31, 2020

Number of MD/ CEO/ WTDs having

received a variable remuneration

award during the nancial year

Number and total amount of

sign-on awards made during the

nancial year

NIL

Details of guaranteed bonus,

if any, paid as joining / sign on

bonus.

NIL

Breakdown of amount of remu-

neration awards for the nancial

year (Amount in ` )

Fixed 7,64,24,458

Variable 3,75,00,492

Deferred NIL

Non-deferred NIL

Total amount of deferred remuner-

ation paid out in the nancial year

NIL

Total amount of outstanding

deferred remuneration

Cash (` in million)

NIL

Shares (nos.) NIL

Shares-linked instruments NIL

Other forms NIL

Note: *Mr. Anuj Tyagi was the Executive Director

& CBO of the Company upto January 8, 2020 and

was appointed as the Managing Director & CEO of

HEHI w.e.f January 9, 2020. Pursuant to merger,

Mr. Tyagi has been appointed as the Executive Director

& CBO of the Company for a period of 5 (ve) years w.e.f

November 13, 2020.

Secretarial Audit

In accordance with the provisions of Section 204 of the

Act and the Companies (Appointment and Remuneration

of Managerial Personnel) Rules, 2014, the Company had

appointed Messrs Bhandari & Associates, Practicing

Company Secretaries for conducting Secretarial Audit for

FY 2019-20.

The Secretarial Audit Report is appended to this Report.

Employees Stock Option Plan (ESOP)

During the year, the Company granted 200,000 stock

options in respect of 200,000 equity shares of ` 10 each

at an exercise price of ` 364.40 per option under ESOP-

2009 to 2 eligible employees.

The Options granted vest in tranches - 25% on completion

of 2 years from grant date, 25% at the end of 3 years from

grant date and the balance 50% on completion of 4 years

from grant date and are exercisable within a period of

5 years from the date of respective vesting.

During the year, Options vested aggregated to 1,095,250

and Options exercised aggregated to 420,000. Pursuant

to the said exercise, the Company received ` 4.14 crore

as exercise consideration (excluding tax). Pursuant to

exercise of Options, 420,000 equity shares of ` 10 each

have been allotted to the concerned employees.

During the year, 45,000 Options lapsed and the Options

in force as on March 31, 2020 were 3,813,000.

There has been no variation in the terms of the Options

granted.

The diluted EPS is ` 5.30 against a basic EPS of ` 5.32.

Employee wise details of Options granted during the year

to KMPs and employees who received grant amounting

to 5% or more of the Options granted during the year are

as follows:

• None of the KMP’s were granted any Options during

the year.

• Mr. Ravi Vishwanath, President – Accident & Health

Business and Mr. Sriharsha Achar, President –

Human Resources were granted 100,000 Options

each during the year.

• No employee was granted options in excess of 1%

of the issued share capital of the Company at the

time of grant.

18 1 3 t h A n n u a l R e p o r t 2 0 1 9 - 2 0

M18 K18

Pursuant to merger, as provided under the Scheme,

Option Grantees of HEHI were issued Options under

ESOP-2009, as detailed below:

Tranche Original

date of

Grant

No. of options

outstanding as on

effective date of

merger

No. of new options

issued under ESOP

2009

Exercise price

(in Rs)

T3 01-Oct-17 33,750 8,767 75.81

T4 09-Feb-18 144,000 37,403 75.81

T5 07-Aug-19 375,000 97,410 281.05

T6 10-Feb-20 875,000 2,27,284 364.60

TOTAL 14,27,750 3,70,864

Note: The options under Tranche T3 and T6 vest in three

tranches- 25% on completion of 2 years from original

grant date, 25% at the end of 3 years from original grant

date and the balance 50% on completion of 4 years from

original grant date.

The options under Tranche T4 and T5 vest in four tranches-

20% on completion of 2 years from original grant date,

20% at the end of 3 years from original grant date, 20% on

completion of 4 years from original grant date and balance

40% on completion of 5 years from original grant date.

All the options are exercisable within a period of 5 years

from the date of respective vesting.

Public Deposits

The Company did not accept any deposits from the public

during the year.

Auditors

At the tenth Annual General Meeting (AGM) held on

September 29, 2017, Members had appointed Messrs B.

K. Khare& Co., Chartered Accountants (Registration No.

of the rm with the ICAI: FRN 105102W) and Messrs G.

M. Kapadia & Co., Chartered Accountants (Registration

No. of the rm with the ICAI: FRN 104767W), as the Joint

Statutory Auditors of the Company to audit the accounts

of the Company upto FY 2021-22 and hold ofce as such

up to the conclusion of the fteenth AGM of the Company.

The requirement to place the matter relating to ratication

of appointment of auditors by Members at every AGM has

been omitted by the Companies (Amendment) Act, 2017

with effect from May 7, 2018. Accordingly, no resolution is

being proposed for ratication of appointment of Statutory

Auditors at the ensuing AGM and a note in respect of

same has been included in the Notice convening the

thirteenth AGM.

Subsidiary Company

The Company has no subsidiaries.

Directors and Key Managerial Personnel

Re-appointment of Mr. Ritesh Kumar as Managing

Director and CEO

The present term of Mr. Ritesh Kumar, as Managing

Director and Chief Executive Ofcer of the Company,

expired on June 9, 2020.

The Nomination and Remuneration Committee of Directors

(NRC) recommended the re-appointment of Mr. Ritesh

Kumar, as the Managing Director and Chief Executive

Ofcer of the Company for a further period of 5 (ve)

years from June 10, 2020. Thereafter, The Board of

Directors, at its meeting held on May 8, 2020 approved the

reappointment of Mr. Ritesh Kumar as Managing Director

and CEO for a term of 5 (ve) years subject to approval of

IRDAI and the Shareholders. IRDAI vide its letter dated June

23, 2020 approved the said appointment.

Appointment of Mr. Anuj Tyagi as Executive Director and

CBO

Mr. Anuj Tyagi, Executive Director & Chief Business Ofcer

of your Company was appointed as the Managing Director

and CEO of HEHI w.e.f. January 9, 2020 while continuing

as a Non-Executive Director of the Company. Pursuant

to the merger, the Board of Directors at its meeting held

on November 13, 2020, approved the appointment of

Mr. Anuj Tyagi, as a Whole-time Director (designated as

Executive Director & Chief Business Ofcer) for a period

of 5 (ve) years, with effect from November 13, 2020,

subject to the approval of IRDAI under Section 34A of the

Insurance Act, 1938 and of the Shareholders.

Change of ERGO Nominee Directors

In October 2020, ERGO International AG, has nominated

Dr. Oliver Martin Willmes (DIN: 08876420) and Dr. Clemens

Muth, (DIN: 07824451) as its new nominees on the Board,

in place of Mr. Alexander Ankel (DIN: 07798908) and

Mr. Theodoros Kokkalas (DIN: 08093899). The Board,

by way of circular resolution approved the appointment

of Dr. Oliver Martin Willmes (DIN: 08876420) and

Dr. Clemens Muth, (DIN: 07824451) as Additional Directors

with effect from October 12, 2020, to hold ofce as such

upto the date of ensuing AGM. Their appointment is placed

before the Members and the same is included in the Notice

of the thirteenth AGM circulated to the members.

Re-appointment of Directors liable to retire by rotation

In accordance with the provisions of the Act and the

Articles of Association of the Company, Ms. Renu Sud

Karnad (DIN: 00008064) and Mr. Deepak S. Parekh

(DIN: 00009078),Directors, would retire by rotation at the

ensuing AGM and being eligible, have offered themselves

for re-appointment and the same is included in the Notice

of the thirteenth AGM circulated to the members.

M19 K19

Orientation Programme for Independent Directors

The Insurance Regulatory and Development Authority of

India (IRDAI) issued a letter dated December 13, 2019,

on ‘Orientation Programme for Independent Directors

of Insurance Companies’, advising all the insurance

companies to ensure that all its independent directors

participate in a 2-day residential Orientation Programme

for independent directors to be conducted by the

National Insurance Academy (NIA), Pune. The objective

of the programme is to ensure high levels of corporate

governance standards and to facilitate fulfillment of

obligations of Independent Directors of the Company in

a prudent manner. The programme provides insights into

the statutory and regulatory framework on the entities with

respect to which they are/would be acting as Independent

Directors. All the Independent Directors attended the said

Orientation Programme.

Opinion of Board (Independent Directors Databank)

The Board is of the opinion that the Independent

Directors of the Company possess requisite qualications,

experience and expertise in insurance, banking, nance,

accountancy, economics, law, human resources, etc. and

they hold highest standards of integrity.

The Company has taken appropriate steps towards the

inclusion of the names of all Independent Directors in

the Databank of Independent Directors maintained by

the Indian Institute of Corporate Affairs, Manesar (‘IICA’).

Further, in terms of Section 150 of the Act read with Rule

6(4) of the Companies (Appointment & Qualication of

Directors) Rules, 2014, the Independent Directors are

required to undertake online prociency self-assessment

test conducted by the IICA within a period of one (1) year

from the date of inclusion of their names in the Databank.

Proviso to Rule 6(4) of the said Rules provides that the

Independent Directors shall not be required to pass

the online prociency self assessment test, if they have

served as a director or key managerial personnel, for a

total period of not less than ten years, as on the date of

inclusion of their name in the databank, in one or more

of the following entities:-

(a) listed public company; or

(b) unlisted public company having a paid-up share

capital of rupees ten crore or more; or

The Independent Directors as applicable would undertake

the online prociency self-assessment test.

Declaration by Directors

The Company has received declarations from all

Independent Directors conrming that they meet the

criteria of independence as provided under sub-section

6 of Section 149 of the Act.

The Company has received declarations from all Directors

confirming that they are not disqualified from being

appointed as Directors under the provisions of Section

164 of the Act. Further, all the Directors have conrmed

that they comply with the ‘t and proper’ criteria prescribed

under the Corporate Governance Guidelines issued by

IRDAI vide circular dated May 18, 2016 (‘Guidelines’).

Signicant and Material Orders passed by the Regulators

or Courts or Tribunals

There are no signicant or material orders passed by the

Regulators or Courts or Tribunals impacting the going

concern status and the Company’s operations in future.

Internal control over Financial Reporting

The Internal Control over Financial Reporting is a process

designed to provide reasonable assurance regarding the

reliability of nancial reporting and the preparation of

nancial statements for external purposes in accordance

with applicable accounting principles and includes those

policies and procedures that (i) pertain to the maintenance

of records that, in reasonable detail, accurately and

fairly reflect the transactions and disposition of the

assets of the Company; (ii) provide reasonable assurance

that transactions are recorded as necessary to permit

preparation of nancial statements in accordance with

generally accepted accounting principles, and that receipts

and expenditures of the Company are being made only

in accordance with authorizations of Management and

Directors of the Company; and (iii) provide reasonable

assurance regarding prevention and timely detection

of unauthorized acquisition, use or disposition of the

Company’s assets that could have a material effect on the

nancial statements.

The Company has established adequate internal control

procedures, commensurate with the nature of its business

and size of its operations and the same are periodically

monitored and reviewed by the Management for its

adequacy and appropriateness. Standard Operating

Procedures are in place largely for all areas of operations

and the same are reviewed periodically. The Management

has assessed the effectiveness of the Company’s internal

control over nancial reporting as of March 31, 2020. As a

result of the evaluation, the Management has concluded that

the Company’s internal control over nancial reporting was

effective as of March 31, 2020 with no signicant deciency.

Audit and Compliance Committee

The Audit and Compliance Committee comprises of

six (6) members – four Independent Directors and two

Non–Executive Directors. The Chairman of the Committee

20 1 3 t h A n n u a l R e p o r t 2 0 1 9 - 2 0

M20 K20

is an Independent Director and a qualied Chartered

Accountant. The composition of the Committee is in

conformity with the provisions of Section 177 of the Act

and the Guidelines.

All the Committee members possess adequate qualica-

tions to fulll their duties as stipulated under the Act and

the Guidelines.

The other details about the Committee are provided in the

Report of the Directors on Corporate Governance.

Indian Accounting Standards (Ind AS)

Pursuant to notification of the Companies (Indian

Accounting Standards) Rules, 2015, IRDAI vide circular

dated March 1, 2016, directed the insurance companies

to prepare nancial statements in accordance with Ind

AS from April 1, 2018 onwards, with comparatives for the

period ending March 31, 2018.

On May 18, 2017, the International Accounting Standards

Board (IASB), issued IFRS 17: Insurance Contracts (applicable

from January 1, 2021) replacing IFRS 4: Insurance Contracts.

Consequently, IRDAI vide circular dated June 28, 2017,

deferred the implementation of Ind AS for a period of

two years i.e. to be implemented effective FY 2020-21.

Considering the challenges in implementation and concerns

expressed by various stakeholders, on November 14, 2018,

the IASB proposed the deferral of IFRS17, by one year i.e. to

be implemented from January 1, 2022.

IRDAI vide circular No. IRDAI/F&A/CIR/ACTS/023/01/2020

dated January 21, 2020 informed the insurance

companies that IRDAI would be in a position to notify the

Regulations on preparation of Ind AS compliant nancial

statements only after nal amendments to IFRS 17 are

carried out by IASB and corresponding Indian equivalent

standard is notied by the Ministry of Corporate Affairs and

stated that it has decided to implement all applicable Ind

AS simultaneously from an effective date that would be

decided after the nalization of IFRS 17 by IASB. Further,

vide Notication dated March 17, 2020, IASB decided that

the effective date of IFRS-17, will be deferred to annual

reporting periods beginning on or after January 1, 2023.

Disclosure under the Sexual Harassment of Women at

Workplace (Prevention, Prohibition and Redressal) Act,

2013

The Company has framed a Policy on Prohibition of Sexual

Harassment at the workplace (POSH Policy) based on the

Sexual Harassment of Women at Workplace (Prevention,

Prohibition and Redressal) Act, 2013 (POSH Act) with an

objective to promote a safe and secure work environment

for all employees and to provide protection against sexual

harassment of employees and prevention thereof and

redressal of complaints.

In accordance with the provisions relating to the

constitution of Internal Complaints Committee under

the POSH Act, the Company has constituted an Internal

Complaints Committee (ICC). Presently, ICC comprises

of six members, of which three are women including a

member from a non-governmental organization, who is an

expert on the subject matter. One of the women members

is the presiding ofcer of ICC.

The role of ICC is to monitor complaints and redressal

of grievances under the POSH Policy. An Online POSH

module was enabled for all employees (including study

material followed by compulsory test). Also during the year,

sessions were conducted on an on-going basis to create

awareness about the Policy amongst the employees.

During the year under review, 3 cases were reported and

are duly closed.

Secretarial Standards

The Company has complied with the applicable provisions

of Secretarial Standards issued by the Institute of

Company Secretaries of India.

Directors’ Responsibility Statement

In accordance with the provisions of Section 134 (5) of

the Act and based on the conrmation provided by the

Management, your Directors state that:

(a) In the preparation of the annual accounts, the

applicable accounting standards have been followed

and there were no material departures;

(b) Accounting policies selected were applied consistently.

Reasonable and prudent judgments and estimates

were made so as to give a true and fair view of the

state of affairs of the Company as at March 31, 2020

and of the prot of the Company for the year ended

on that date;

maintenance of adequate accounting records in

accordance with the provisions of the Act and Rules

made thereunder, Insurance Act, 1938, as amended,

Insurance Rules, 1939 and IRDAI Regulations,

Orders, Circulars and Guidelines for safeguarding

the assets of the Company and for preventing and

detecting frauds and other irregularities;

(d) The annual accounts of the Company have been

prepared on a going concern basis;

(e) Internal nancial controls have been laid down to be

followed by the Company and such internal nancial

controls are adequate and operating effectively; and

(f) Proper systems are in place to ensure compliance

with the provisions of all applicable laws and

that such systems were adequate and operating

effectively.

M21 K21

Acknowledgements

The Board wishes to thank and appreciate the Insurance

Regulatory and Development Authority of India, General

Insurance Council, Competition Commission of India,

Reserve Bank of India, Ministry of Corporate Affairs and

other Ministries of the Government of India, Depositories

and the Stock Exchanges for their guidance and extending

co-operation in the endeavors pursued by the Company.

The Board wishes to express its sincere gratitude to and

acknowledges the role of all the stakeholders – policyholders,

channel partners, reinsurers and intermediaries for their

continued support, trust and co-operation.

The Board takes this opportunity to thank the Promoters

– Housing Development Finance Corporation Limited

and ERGO International AG for providing their invaluable

guidance and support.

The Board expresses its sincere appreciation to employees

at all levels for their hard work, loyalty and commitment,

enabling the Company’s continued growth.

The Board acknowledges the indomitable spirit and

commitment shown by the employees while servicing

the customers and ensuring least disruption during the

COVID-19 pandemic.

On behalf of the Board of Directors

KEKI M. MISTRY

Non-Executive Director

(DIN: 00008886)

RITESH KUMAR

Managing Director and CEO

(DIN: 02213019)

Mumbai

November 13, 2020

22 1 3 t h A n n u a l R e p o r t 2 0 1 9 - 2 0

M22 K22

DISCLOSURES ON MANAGERIAL REMUNERATION

Details of remuneration as required under Rule 5 (1)

of the Companies (Appointment and Remuneration of

Managerial Personnel) Rules, 2014, is provided below:

Ratio of remuneration of each director to the median

remuneration of the employees of the Company for

FY 2019-20:

Name Designation Ratio of

remuneration

of each

Director to

the median

remuneration

of the

employees

Mr. Deepak S. Parekh Chairman

(Non-Executive)

2:1

Mr. Keki M. Mistry Non-Executive Director 6:1

Ms. Renu Sud Karnad Non-Executive Director 4:1

Mr. Alexander Ankel Non-Executive Director —

Mr. Theodoros

Kokkalas

Non-Executive Director —

Mr. Bernhard

Steinruecke

Independent Director 7:1

Mr. Mehernosh B.

Kapadia

Independent Director 7:1

Mr. Arvind Mahajan Independent Director 7:1

Mr. Ameet P. Hariani Independent Director 7:1

Mr. Samir H. Shah Executive Director and

CFO

45:1

Mr. Anuj Tyagi* Executive Director &

CBO

43:1

Mr. Ritesh Kumar Managing Director and

CEO

162:1

Percentage increase in remuneration of each Director

and Key Managerial Personnel in FY 2019-20:

Name Designation Increase in

Remuneration

(%)

Mr. Ritesh Kumar Managing Director and

CEO

12%

Mr. Anuj Tyagi* Executive Director & CBO 11%

Mr. Samir H. Shah Executive Director & CFO 10%

Mr. Dayananda V.

Shetty

Company Secretary &

Chief Compliance Ofcer

11%

* Mr. Anuj Tyagi, Executive Director & CBO of your Company

was appointed as the Managing Director and CEO of HEHI

w.e.f. January 9, 2020 while continuing as a Non-Executive

Director of the Company. Pursuant to the merger, the Board of

Directors at its meeting held on November 13, 2020, approved

the appointment of Mr. Anuj Tyagi, as a Whole-time Director

(designated as Executive Director & CBO) for a period of 5 (ve)

years, w.e.f. November 13, 2020.

The Company did not pay any commission to Non-Executive

Directors. It is proposed to pay commission of `10 lakh

each to the Independent Directors for FY 2019-20, which

is the same as paid for FY 2018-19. Further details are

provided in Form MGT-9.

Percentage increase in the median remuneration of

employees in FY 2019-20: 6%

Number of permanent employees on the rolls of the

Company as on March 31, 2020: 3,899

Average percentile increase already made in the salaries

of employees other than the managerial personnel

in the last nancial year and its comparison with the

percentile increase in the managerial remuneration

and justication thereof and point out if there are any

exceptional circumstances for increase in the managerial

remuneration:

The average increase in the remuneration of all employees

in FY 2019-20 was 6.9%. The average increase in the

remuneration of managerial personnel (i.e Whole-time

Directors) stood at 11% and of non-managerial personnel

was 6.9%.

The average increase in remuneration of both the

managerial and non-managerial personnel was determined

based on the overall performance of the Company. Further,

the criteria for remuneration of non-managerial personnel

is based on an internal evaluation of key result areas, while

the remuneration of the managerial personnel is based

on the remuneration policy as recommended by the NRC

and approved by the Board of Directors and Guidelines

on Remuneration of Non-Executive Directors, Managing

Director / Chief Executive Ofcer / Whole-time Directors

of Insurers issued by IRDAI.

The Company conrms that there were no exceptional

circumstances which warranted an increase in managerial

remuneration which was not justified by the overall

performance of the Company.

The remuneration of Key Managerial Personnel is based

on the overall performance of the Company.

Note: The above information pertains to standalone HDFC

ERGO General Insurance Company Limited for FY 20.

Annexure 1 to Directors’ Report

M23 K23

Report of the Directors on Corporate Governance

Effective Corporate Governance lays the strong foundation

on which successful companies are built to last. The

need for Corporate Governance has deepened due to

globalization, wide spread of shareholders and greater

expectations of society. Corporate Governance has

therefore become imperative for instilling and maintaining

ensuring investors’ condence in the corporate sector

towards the economic development of society.

Corporate Governance has gained importance in the

corporate sector with recognition given by international

market to those companies which are well managed and

practice high standards of Corporate Governance.

Corporate Governance is the application of best

management practices and a commitment to conduct

business in a fair, transparent and ethical manner

in compliance with the applicable laws. Corporate

Governance is the mechanism put in place by the

corporate entity / group to protect the interest and rights

of stakeholders having direct or indirect interest in the

success and growth of its business viz. shareholders,

customers, employees, government, regulator, service

providers, nanciers and society at large.

In hours of need like COVID-19 pandemic, Corporate

Governance refers to fully respecting and adhering to the

advisories given by various government authorities and

agencies and taking utmost care of safety and wellbeing

of all human being connected with the business enterprise

including employees, customers, channel partners and

suppliers.

Corporate Governance deals with how a corporate is

governed. It is all about promoting corporate fairness,

transparency and accountability. Good corporate gover-

nance promotes equity, compliance and deters fraud and

other deceptive practices, thus ensuring long term growth

and development of the Company.

India has witnessed increased shareholder activism

where the shareholders have become more sensitive

towards governance based issues and have become more

cognizant to invest in companies having good governance

practices and business ethics.

Company’s philosophy on Corporate Governance

The Company’s philosophy on Corporate Governance has

been inuenced by its Promoters, Housing Development

Finance Corporation Limited (HDFC) and ERGO International

AG (ERGO). The Company endeavors to adhere to the

established and proven practices of HDFC and ERGO in

maintaining corporate culture and the spirit in managing

the business. Corporate Governance at the Company is

not just adherence to legal statutes, mandatory rules

and guidelines. It is Company’s philosophy to observe the

spirit behind the letter. The Company believes in nurturing

its long term commitment and sustainable relationships

with Policyholders, Shareholders and other stakeholders.

The Company believes that Corporate Governance is a

continuous journey towards sustainable value creation for

all the stakeholders and is driven by its values of Sensitivity,

Excellence, Ethics and Dynamism (SEED). The Company’s

vision is to be the most trusted partner for every stakeholder

and the Company is committed to provide fair, transparent

and equitable treatment to all stakeholders.

The Company endeavors to abide by its value system

guided by the principles of accountability, transparency and

timely disclosure of matters of interest to the stakeholders

and ensuring thorough compliance with the applicable laws

and conducting business in best ethical manner.

The Company is not only committed to follow the Corporate

Governance practices embodied in various regulatory

provisions, but is constantly striving to adopt and adhere

to the emerging best practices and benchmarking itself

against such practices. The Independent Directors always

watch for the business practices followed by the Company

and consider the interest of various stakeholders including

policyholders whilst approving major Board decisions.

The Board of Directors has taken cognizance of various

regulatory changes in the overall governance framework

and remains committed to imbibe the spirit of governance

in all spheres of the Company’s business. The Company

has complied with various provisions of the Act and the

Guidelines on Corporate Governance for the Insurance

Sector (‘Guidelines’) issued by the Insurance Regulatory

and Development Authority of India (IRDAI) and certain

non-mandatory requirements. The status with regard to

the same is listed below:

Board of Directors

The Board of Directors of the Company are responsible

for ensuring fairness, transparency and accountability

of the Company’s business operations and they provide

appropriate directions, with regard to leadership, vision,

strategies, policies, monitoring, supervision, accountability

to shareholders and to achieve greater levels of performance

on a sustained basis as well as adherence to the best

practices of Corporate Governance. The Board plays a

pivotal role in creation of stakeholder value and ensures that

the Company adopts sound and ethical business practices

and that the resources of the Company are optimally used.

The Board periodically reviews and approves the strategy

and oversees the decisions of the Management.

The Company has a multi-tier management structure,

comprising the Board of Directors and its Committees at

the apex, followed by employees at senior management,

middle management and junior management positions.

Through this, it is ensured that strategic supervision is

provided by the Board; control and implementation of

Company’s strategy is achieved effectively, operational

management remains focused on implementation;

information regarding the Company’s operations and

financial performance is made available promptly;

delegation of decision making with accountability is

achieved; nancial and operating control and integrity

are maintained at an optimal level; and risks are suitably

evaluated and dealt with.

Composition

The Board has a mix of executive, non-executive and

independent directors. The Board comprises of competent

24 1 3 t h A n n u a l R e p o r t 2 0 1 9 - 2 0

M24 K24

and qualied directors to drive the strategies in a manner

that would sustain the growth of the Company and

protect the interest of various stakeholders in general

and Policyholders in particular. The Board comprises of

directors having expertise in insurance, banking, nance,

accountancy, economics, law, human resources, etc.

As at November 13, 2020, the Board comprised of twelve

members, of which three are Whole-time Directors and

nineare Non-Executive Directors. The three Whole-time

Directors include the Managing Director & CEO, Executive

Director & Chief Business Ofcer and Executive Director

& Chief Financial Ofcer. Of the nine Non–Executive

Directors, three Directors represent HDFC which includes

one Woman Director, two Directors represent ERGO and

four are Independent Directors.

The Company is Indian Owned and Controlled and is in

compliance with the Guidelines on Indian Owned and

Controlled stipulated by IRDAI.

All the Independent Directors have conrmed that they

satisfy the criteria laid down for an independent director

under Section 149(6) of the Act and Rule 6(1) and

(2) of the Companies (Appointment and Qualication

of Directors) Rules, 2014, as amended. None of the

Directors of the Company are related to one another. All

the Directors of the Company fulll the ‘t and proper

criteria’ as mentioned in the Guidelines.

The details of Board of Directors and their directorships in

public companies as on November 13, 2020 are as under:

Sr.

No.

Directors Category No. of

Directorships

As on

November

13, 2020#

1. Mr. Deepak S. Parekh Chairman (Non-

Executive)

2. Mr. Keki M. Mistry Non-Executive

Director

3. Ms. Renu Sud Karnad Non-Executive

Director

4. Mr. Alexander Ankel* Non-Executive

Director

—

5. Mr. Theodoros

Kokkalas*

Non-Executive

Director

—

6. Dr. Oliver Martin

Willmes**

Non-Executive

Director

—

7. Dr. Clemens Matthias

Muth**

Non-Executive

Director

—

8. Mr. Bernhard

Steinruecke

Independent

Director

9. Mr. Mehernosh B.

Kapadia

Independent

Director

10. Mr. Arvind Mahajan Independent

Director

11. Mr. Ameet P. Hariani Independent

Director

12. Mr. Samir H. Shah Executive

Director & CFO

—

Sr.

No.

Directors Category No. of

Directorships

As on

November

13, 2020#

13. Mr. Anuj Tyagi*** Executive

Director & CBO

14. Mr. Ritesh Kumar Managing

Director & CEO

—

*upto October 11, 2020; **w.e.f October 12, 2020

*** Mr. Anuj Tyagi, Executive Director & CBO of your

Company was appointed as the Managing Director and

CEO of HEHI w.e.f. January 9, 2020 while continuing as

a Non-Executive Director of the Company. Pursuant to

the merger, the Board of Directors at its meeting held

on November 13, 2020, approved the appointment of

Mr. Anuj Tyagi, as a Whole-time Director (designated as

Executive Director & CBO) for a period of 5 (ve) years,

w.e.f. November 13, 2020.

#Directorships held in public companies registered

under the provisions of the Companies Act, 1956 / 2013

(excluding the Company) have been considered.

Responsibilities

The Board of Directors represents the interest of the

Company’s shareholders in optimizing long-term value by

providing the Management with guidance and strategic

direction on shareholders’ behalf. The Board’s mandate

is to oversee the Company’s strategic direction, review

financial, operational and investment performance,

approve annual business plan / budget, ensure regulatory

compliance and safeguard interest of all stakeholders. The

Board plays a pivotal role in ensuring good governance

and creating value for all stakeholders. The Directors

acknowledge their duties as prescribed under the Act, the

rules framed thereunder and the Guidelines.

Role of Independent Directors

The Independent Directors bring an independent

judgement to bear on the Board’s deliberation and

objectivity in the Board’s decision making process. The

Independent Directors participate constructively and

actively in the Committees of the Board in which they

are members. They represent and safeguard the interest

of all stakeholders.

Tenure

In accordance with the provisions of Section 152(6) of

the Act, not less than two-thirds of the total number of

directors shall be persons whose period of ofce is liable

to determination by retirement by rotation. One-third of

such directors are liable to retire every year and if eligible,

offer themselves for re-appointment.

In accordance with the provisions of Section 149(10)

and 152(5) of the Act, the Independent Directors are not

liable to retire by rotation and are appointed for a xed

term of 5 years.

M25 K25

Board Meetings and Procedures

All Directors participate in discussing the strategies,

business performance, nancials, investment performance

and key risks pertaining to the business of the Company.

The Board follows a set of appropriate standard procedures

in the conduct of Board meetings which is summarized

below:

The meetings of the Board of Directors are generally

held at the Company’s registered ofce in Mumbai. The

schedule of meetings to be held in a calendar year is

planned well in advance and informed to the Directors.

The notice of each Board and Committee meeting is

given in writing through email to each Director, Appointed

Actuary, members of Senior Management and Statutory

and Internal Auditors, as and when required. The Company

also makes arrangements for participation of Directors

in the meeting through video-conferencing (VC), if for any

reason they are unable to participate in the meeting in

person. The Board and its Committees meet at least once

a quarter inter-alia to review the nancial, operational,

investment performance and key risks impacting the

business of the Company.

The Company Secretary in consultation with the Executive

Board prepares a detailed agenda for the meetings. All

departments communicate with the Company Secretary

in advance with regard to matters requiring approval of

the Board to enable inclusion of the same in the agenda

for the meetings. With the objective of transparent ow

of information from the Management, detailed agenda

notes are sent to all Directors in advance. The Members of

the Board also recommend inclusion of any matter in the

agenda for discussion. In case of matters requiring urgent

consideration by the Board and arising post the dispatch of

agenda, the same is taken up for discussion by the Board

as part of any other business with the permission of the

Chairman and consent of majority of Directors present

at the meeting.

The members of the Board have access to all information

of the Company. Appointed Actuary is a permanent invitee

at the Meetings of the Board, Audit and Compliance

Committee, Policyholder Protection and Grievance

Redressal Committee and Risk Management Committee.

Members of Senior Management team are invited to

attend the Board and Committee meetings so as to provide

additional inputs on the items being discussed. Urgent

matters are also considered and approved by passing

resolution through circulation, which are noted at the next

meeting. The Company Secretary records the minutes of the

proceedings of each Board and Committee meetings. The

draft minutes of each Board and Committee meetings are

circulated to the members of the Board / Committee within

fteen days from the date of meeting and the comments, if

any on the draft minutes are received within seven days of

its circulation. The minutes are nalized within thirty days

and thereafter recorded in the Minutes Book.

During FY 2019-20, the Board met six (6) times on May 3,

2019, June 19, 2019, July 24, 2019, October 23, 2019,

January 15, 2020 and January 22, 2020. The time gap

between any two meetings did not exceed 120 days.

The attendance of the Directors at the said meetings is

listed below:

Directors No. of Meetings

held during the

tenure

No. of

Meetings

attended

Mr. Deepak S. Parekh 6 5

Mr. Keki M. Mistry 6 6

Ms. Renu Sud Karnad 6 5

Mr. Alexander Ankel* 6 3

Mr. Theodoros Kokkalas* 6 4

Dr. Oliver Martin Willmes** — —

Dr. Clemens Matthias Muth** — —

Mr. Bernhard Steinruecke 6 6

Mr. Mehernosh B. Kapadia 6 6

Mr. Arvind Mahajan 6 6

Mr. Ameet P. Hariani 6 6

Mr. Samir H. Shah 6 6

Mr. Anuj Tyagi 6 5

Mr. Ritesh Kumar 6 6

*upto October 11, 2020; **w.e.f October 12, 2020

The Board also met on May 8, 2020, June 12, 2020,

July 22, 2020, October 21, 2020 and on November 13,

2020 for consideration and approval of restated audited

nancial statements for the year ended March 31, 2020.

Committees

To enable better and more focused attention on the

affairs of the Company and as required under regulatory

provisions, the Board has constituted various Committees.

These Committees lay down the groundwork for decision-

making and report at the subsequent Board meeting. The

terms of reference of the Committees are approved by

the Board, which inter-alia includes all the statutory and

regulatory stipulations. Meetings of all Committees, except

Nomination and Remuneration Committee (NRC) are held

on a quarterly basis. The NRC meets minimum twice in a

year and as and when required for transacting business

assigned to it. Minutes of the Committee meetings / report

on the activities of the Committee are submitted to the

Board at its quarterly meetings. Matters requiring the

Board’s attention/ approval are generally placed in the

form of notes/ report to the Board from the respective

Committee. The Board has constituted the following

Committees with specic terms of reference:

1. Audit and Compliance Committee (ACC);

2. Investment Committee (IC);

3. Risk Management Committee (RMC);

4. Policyholder Protection and Grievance Redressal

Committee (PPGRC);

5. Nomination and Remuneration Committee (NRC);

6. Corporate Social Responsibility Committee (CSR); and

7. Allotment Committee;

26 1 3 t h A n n u a l R e p o r t 2 0 1 9 - 2 0

M26 K26

Internal

Auditors

External

Auditors

Sub

Committee

Sub

Committee

Executive

Director 1

Executive

Director 2

Board of

Directors

Audit & Compliance

Underwriting

Claims

Human Resources

Business Groups (Motor, Accident &

Health, Commercial and Crop Insurance)

Reinsurance

Finance & Accounts

Fraud Control &

Investigation

Administration & CSR

Secretarial, Legal &

Compliance

Risk Management &

Internal Audit

Strategy

Actuarial

Investments

Information

Technology

Customer Experience

Management

Operations &

Marketing

Company Secretary

Other Board Committees

(Allotment Committee)

MD & CEO

Mandatory Committees

Sub

Committee

Policyholder Protection &

Grievance Redressal

Corporate Social

Responsibility

Risk Management

Nomination &

Remuneration

Investment

HDFC ERGO

General Insurance Company Limited

The relationship as on November 13, 2020 between the Board, the Committees and the Senior Management functions is illustrated b

elow:

M27 K27

The role and composition of various Committees, including

the number of meetings held during the year and the

related attendance of the Committee Members at the

said meetings, are given below.

Audit and Compliance Committee (ACC)

The Audit and Compliance Committee comprises six (6)

members – four Independent Directors and one nominee

each of HDFC and ERGO. The Chairman of the Committee

is an Independent Director and a qualied Chartered

Accountant. The composition of the Committee is in

conformity with the provisions of Section 177 of the Act

and the Guidelines. During the year, the Committee was

re-constituted to induct Mr. Ameet P. Hariani, Independent

Director as a Member of the Committee.

All the Committee Members possess adequate qualica-

tions to fulll their duties as stipulated under the Act and

the Guidelines.

The Members of the Senior Management and Auditors are

invited to participate in the meetings of the Committee

as and when necessary. The Committee invites Senior

Executives as it considers their presence to be appropriate

at its meetings. The Chairman of the Committee briefs

the Board of Directors about signicant discussions and

decisions taken at its meeting.

The Committee inter-alia oversees the nancial statements

and nancial reporting before submission to the Board,

internal audit function, compliance function and the work

of the Statutory Auditors. It also reviews the reports of the

Internal Auditors and Statutory Auditors along with the

comments and action taken reports of the Management.

The Committee gives appropriate directions to the

Management in areas that needs to be strengthened.

The Committee reviews and raties the related party

transactions, monitors age-wise analysis of unclaimed

amount of Policyholders, progress on settlement of

unclaimed amount and steps taken by the Company

to reduce unclaimed amount, reviews the process

and mechanism in place to comply with the provisions

of applicable laws. The Committee recommends to

the Board, the appointment or re-appointment of the

Statutory Auditors, Internal Auditors, Secretarial Auditors,

Concurrent Auditors, Investment Risk Management

Auditors and their remuneration. The Committee and

Statutory Auditors discuss the nature and scope of

audit prior to the commencement of the audit and areas

of concern, if any, arising post audit. The Committee

approves the type and nature of other services that can be

availed by the Company from the Statutory Auditors. The

Committee also oversees internal nancial control and risk

management systems of the Company and ensures that

adequate procedures and processes has been set-up to

address all concerns relating to adequacy of checks and

control mechanisms.

During FY 2019-20, the ACC met six (6) times on May 3,

2019, July 24, 2019, October 23, 2019, January 15, 2020,

January 22, 2020 and February 24, 2020.

The Committee also met on May 8, 2020, July 7, 2020,

July 22, 2020, August 24, 2020 October 21, 2020 and

on November 13, 2020 wherein it recommended the

restated audited nancial statements for the year ended

March 31, 2020 to the Board for approval.

The composition of the ACC and attendance of the

Committee Members at the meetings held during FY

2019-20 are listed below:

Members No. of

Meetings

held during

the tenure

No. of

Meetings

attended

Mr. Mehernosh B. Kapadia

(Chairman)

6 6

Mr. Bernhard Steinruecke 6 6

Mr. Arvind Mahajan 6 6

Mr. Ameet Hariani 3 3

Mr. Keki M. Mistry 6 6

Mr. Alexander Ankel* 6 4

Dr. Oliver Martin Willmes* — —

*Dr. Oliver Martin Willmes was inducted as a Member of the Committee

in place of Mr. Alexander Ankel w.e.f October 12, 2020.

Investment Committee (IC)

The Investment Committee comprises eight (8) members –

one HDFC nominee, one ERGO nominee, one Independent

Director, the Managing Director and CEO, the Executive

Director and Chief Financial Ofcer, the Appointed Actuary,

the Chief Investment Ofcer and the Chief Risk Ofcer.

The Chief Compliance Ofcer and Company Secretary

attends all Committee meetings. The composition of the

Committee is in conformity with the provisions of the

IRDAI (Investment) Regulations, 2016, as amended from

time to time.

The Committee reviews the Investment Policy of the

Company, its implementation and the operational

framework for the investment operations, ensuring

liquidity for smooth operations, compliance with prudential

regulatory norms on investments, risk management/

mitigation strategies to ensure adequate return on

investment of Policyholder and Shareholder funds. The

28 1 3 t h A n n u a l R e p o r t 2 0 1 9 - 2 0

M28 K28

Committee also reviews the ALM and solvency position,

the investment strategies adopted from time to time and

gives suitable directions as needed.

The Committee at its quarterly meetings inter-alia

reviews the report of the concurrent auditors on audit

of investment transactions and related systems, the

investments made by the Company during the quarter,

ALM position and the investment strategy for period ahead

and provides its advise and suggestions.

All the Committee Members are fully conversant with

various responsibilities cast on them by the IRDAI

(Investment) Regulations, 2016, as amended from time to

time. The Committee regularly apprises the Board on the

performance and analysis of the Company’s investment

portfolio and strategy.

During the year FY 2019-20, the IC met four (4) times

on May 3, 2019, July 24, 2019, October 23, 2019 and

January 22, 2020. The IC also met on May 8, 2020, July

22, 2020 and October 21, 2020.

The composition of the IC and attendance of the

Committee Members at the meetings held during the

year are listed below:

Members No. of

Meetings

held during

the tenure

No. of

Meetings

attended

Mr. Keki M. Mistry (Chairman) 4 4

Mr. Alexander Ankel* 4 2

Dr. Clemens Matthias Muth* — —

Mr. Arvind Mahajan 4 4

Mr. Ritesh Kumar 4 4

Mr. Samir H. Shah 4 4

Mr. Hiten B. Kothari (Appointed

Actuary)

4 4

Mr. Abhiranjan Gupta

(Chief Investment Ofcer)

4 3

Mr. Sanjay Mishra

(Chief Risk Ofcer)

4 4

*Dr. Clemens Matthias Muth was inducted as a Member of the

Committee in place of Mr. Alexander Ankel w.e.f October 12, 2020.

Risk Management Committee (RMC)

The Risk Management Committee comprises eight (8)

members – three Independent Directors, two HDFC

nominees, one ERGO nominee, the Managing Director and

CEO and the Executive Director and Chief Financial Ofcer.

The Chairman of the Committee is an Independent Director.

The Chief Risk Officer is a permanent invitee to the

meetings of the Committee.

The terms of reference of the Committee inter-alia include

overseeing the Company’s risk management policy

and practices, reviewing various key risks and frauds

associated with the business of the Company, evaluation

of risk exposure and laying down risk tolerance limits and

thereby assisting the Board in effective monitoring of the

Risk Management Framework (RMF). The RMC advises

the Board with regard to risk management in relation to

strategic and operational matters. The RMC also reviews

the ALM and the solvency position on a regular basis.

In accordance with the framework, the RMC provides an

assurance that risk exposures are adequately controlled

and identified gaps are effectively taken care of by

implementing appropriate risk minimization measures.

During FY 2019-20, the RMC met four (4) times on May

3, 2019, July 24, 2019, October 23, 2019 and January

22, 2020.

The composition of the RMC and attendance of the

Committee Members at the meetings held during

FY 2019-20 are listed below

Members No. of

Meetings

held during

the tenure

No. of

meetings

attended

Mr. Bernhard Steinruecke

(Chairman)

4 4

Mr. Mehernosh B. Kapadia 4 4

Mr. Ameet P. Hariani 4 4

Mr. Keki M. Mistry 4 4

Ms. Renu Sud Karnad 4 4

Mr. Theodoros Kokkalas* 4 3

Dr. Oliver Martin Willmes* — —

Mr. Samir H. Shah 4 4

Mr. Ritesh Kumar 4 4

*Dr. Oliver Martin Willmes was inducted as a Member of the Committee

in place of Mr. Theodoros Kokkalas w.e.f October 12, 2020.

The Company has a sub- committee of the RMC (SC-

RMC) comprising of the Senior Executives including the

Managing Director and CEO and Executive Directors. The

SC-RMC inter-alia reviews the Company’s RMF and its

effectiveness, monitors key areas of existing and emerging

risks and assists the RMC in fullling its objectives of

managing various risks associated with the business of

the Company. On a regular basis, the SC-RMC reviews

and updates the RMC on matters such as IBNR utilization

status, premium payment warranty, frauds, business

continuity and disaster recovery plan and ALM from a

risk perspective.

M29 K29

Policyholder Protection and Grievance Redressal

Committee (PPGRC)

The Policyholder Protection and Grievance Redressal

Committee comprises seven (7) members - two Independent

Directors, two HDFC nominees, one ERGO nomine, an

Executive Director and a Non-Executive Director. The

Chairman of the Committee is an Independent Director.

The Committee reviews the processes followed in redressal

of Policyholder grievances and the grievance redressal

mechanism of the Company and suggests mechanism

for speedy redressal of complaints/ grievances from

Policyholders. The Committee also reviews the steps

taken by the Company to reduce unclaimed amount due

to the Policyholders.

The Committee also reviews (i) the awards given by

Insurance Ombudsman/Consumer Forums and the root

cause of customer complaints; (ii) the claims report,

including status of outstanding claims with ageing and

repudiated claims with analysis of reasons thereof.

The Policy on Protection of Interests of Policyholders (PPHI

Policy) is available on the website (www.hdfcergo.com). The

key objective of the Policy is to provide for a mechanism to

redress the grievance and complaints of the Policyholders

in a time bound manner and to their satisfaction in

accordance with the applicable laws. A designated

email id viz. [email protected] is provided to enable

Policyholders to submit their grievance/ complaint and its

speedy redressal.

The Committee regularly submits its report to the Board

inter-alia with regard to complaints/ grievances received

and resolved, mechanism in place/ process being followed

for resolution of the complaints/ grievances and its

observations on the efcacy of the existing mechanism.

The report also contains the status of outstanding claims

with ageing and repudiated claims with analysis of reasons

thereof.

During FY 2019-20, the PPGRC met four (4) times on May

3, 2019, July 24, 2019, October 23, 2019 and January

22, 2020.

The composition of the PPGRC and the attendance of the

Committee Members at the meetings held during the year

are listed below:

Members No. of

Meetings

held during

the tenure

No. of

meetings

attended

Mr. Arvind Mahajan (Chairman) 4 4

Mr. Ameet P. Hariani 4 4

Mr. Keki M. Mistry 4 4

Ms. Renu Sud Karnad 4 4

Mr. Alexander Ankel* 4 2

Dr. Clemens Matthias Muth* – –

Mr. Anuj Tyagi 4 4

Mr. Samir H. Shah 4 4

*Dr. Clemens Matthias Muth was inducted as a Member of the

Committee in place of Mr. Alexander Ankel w.e.f October 12, 2020.

The Corporate Governance Guidelines issued by IRDAI,

advised insurers to include an expert/ representative of

customers as an invitee at the meetings of the Committee

to enable insurers to formulate policies for protection of

interests of the Policyholders and assess compliance

thereof.

Considering the vast experience of Dr. Jagdish Khattar,

former Independent Director of the Company, in grievance

redressal and customer service, the Company has

appointed Dr. Khattar as an expert/ representative of

customers to take care of the interest of the Policyholders

and suggest formulation of requisite policies thereto and

assess compliance thereof.

Dr. Khattar attends regular meetings of PPGRC as an

invitee and provides valuable advise to the Company in

protection of interest of Policyholders.

The Company has a sub-committee of the PPGRC

(SC-PPGRC) comprising of the Senior Management

team including the Executive Director. The SC-PPGRC

inter-alia reviews the effectiveness of the grievance

redressal mechanism, volume of complaints as compared

to business growth, turn-around-time for redressal of

Policyholder grievances, escalation and C&G trend –

operation, claims and sales, customer service initiatives

and insurance awareness program undertaken by the

Company.

Nomination and Remuneration Committee (NRC)

The Nomination and Remuneration Committee comprises

six (6) members - three Independent Directors, two HDFC

30 1 3 t h A n n u a l R e p o r t 2 0 1 9 - 2 0

M30 K30

nominees and one ERGO nominee. The Chairman of the

Committee is an Independent Director.

The terms of reference of the Committee inter-alia includes

consideration and determination of the salary and other

terms of the compensation package for the Whole-

time Directors, approval of the annual compensation

of the Whole-time Directors, subject to approval of

IRDAI, approval of the annual increments to the Senior

Management Personnel as well as overall salary increase

across the organization, administration of the Employee

Stock Option Plan (ESOP), approval for grant of stock

options to eligible employees and xing of criteria inter-

alia for evaluation of performance of individual Directors,

Board as a whole and Board Committees.

During the year, the NRC met two (2) times on May 3, 2019

and January 22, 2020. The NRC also met on May 8, 2020.

The composition of the NRC and the attendance of the

Committee Members at the meetings held during the year

are listed below:

Members No. of Meetings

held during the

tenure

No. of

meetings

attended

Mr. Mehernosh B. Kapadia

(Chairman)

2 2

Mr. Bernhard Steinruecke 2 2

Mr. Arvind Mahajan 2 2

Mr. Keki M. Mistry 2 2

Ms. Renu Sud Karnad 2 2

Mr. Alexander Ankel* 2 2

Dr. Clemens Matthias Muth* — —

*Dr. Clemens Matthias Muth was inducted as a Member of the

Committee in place of Mr. Alexander Ankel w.e.f October 12, 2020.

Corporate Social Responsibility Committee (CSR)

The CSR Committee comprises six (6) members – two

Independent Directors, two HDFC nominees, one ERGO

nominee and one Non-Executive Director. The Chairman

of the Committee is an Independent Director.

During FY 2019-20, the Committee met four (4) times

on May 3, 2019, July 24, 2019, October 23, 2019 and

January 22, 2020.

The composition of the CSR Committee and the attendance

of the Committee Members at the meetings held during the

year are listed below:

Members No. of

Meetings

held during

the tenure

No. of

meetings

attended

Mr. Ameet P. Hariani (Chairman) 4 4

Mr. Mehernosh B. Kapadia 4 4

Mr. Deepak S. Parekh 4 3

Ms. Renu Sud Karnad 4 4

Mr. Theodoros Kokkalas* 4 3

Dr. Oliver Martin Willmes* — —

Mr. Anuj Tyagi

4 4

*Dr. Oliver Martin Willmes was inducted as a Member of the Committee

in place of Mr. Theodoros Kokkalas w.e.f October 12, 2020.

The CSR Policy of the Company inter-alia species the

broad areas of CSR activities that could be undertaken by

the Company, approach and process for undertaking CSR

projects and the monitoring mechanism. The CSR Policy is

available on the website of the Company (www.hdfcergo.

com). The annual report on CSR activities, as prescribed

under Section 135 of the Act read with Rule 9 of the

Companies (Corporate Social Responsibility Policy) Rules,

2014, as amended, is appended to the Board’s Report.

The Company has a sub- committee of the CSR Committee

(SC-CSR) comprising of the Senior Management team

including Executive Directors. The SC-CSR identifies,

implements and monitors the CSR projects on a

continuous basis and facilitates the CSR Committee

in accomplishing the objectives as stipulated under

Section 135 of the Act read with CSR Rules.

Allotment Committee (AC)

The Allotment Committee comprises ve (5) members –

one Independent Director, two HDFC nominees, one ERGO

nominee and the Managing Director & CEO.

Members Position

Mr. Mehernosh B. Kapadia Independent Director

Mr. Keki M. Mistry Non-Executive Director

Ms. Renu Sud Karnad Non-Executive Director

Mr. Alexander Ankel* Non-Executive Director

Dr. Clemens Matthias Muth* Non-Executive Director

Mr. Ritesh Kumar Managing Director and CEO

*Dr. Clemens Matthias Muth was inducted as a Member the Committee

in place of Mr. Alexander Ankel w.e.f October 12, 2020.

M31 K31

The terms of reference of the Committee inter-alia includes

consideration and approval of allotment of shares and other

securities either pursuant to exercise of stock options by

eligible employees or in case the Board approves, issue of

new securities from time to time.

During the year, the Committee approved the allotment

of 420,000 equity shares pursuant to exercise of stock

options under Employees Stock Option Plan – 2009.

Remuneration of Non-Executive Directors

The remuneration of Non-Executive Directors consists of

sitting fees and commission. The details of sitting fees and

commission paid to Non-Executive Directors are provided

in Section VI (B) of Form MGT-9, appended to the Board’s

Report.

Whistleblower Policy

The Company promotes ethical behavior in all its

dealings, business or otherwise and has put in place a

Whistleblower Policy (Policy) for reporting of any illegal

or unethical behaviour. The Policy is uploaded on the

website of the Company. In terms of the Policy, any

person including employees, vendors and customers may

report violations of laws, or unethical/ improper conduct,

malpractice, breach of Code of Conduct/ Policies to the

Whistleblower Complaints Committee constituted for the

purpose. The Policy provides for maintaining condentiality

of such reporting and ensures that the Whistleblowers

are protected and not subjected to any discriminatory

practices. In respect of cases reported to the Committee

appropriate disciplinary action has been taken.

In terms of the Policy whistle blowing complaint can be

sent directly to the chairman of the Audit and Compliance

Committee. During the year, no person was denied access

to the Committee for expressing concerns or reporting

grievances under the Policy.

Code of Conduct

The Company’s Code of Conduct is applicable to all

employees and Directors of the Company. All the members

of the Board and Senior Management Personnel have

conrmed adherence to the provisions of the said Code

of Conduct.

On behalf of the Board of Directors

KEKI M. MISTRY

Non-Executive Director

(DIN: 00008886)

RITESH KUMAR

Managing Director and CEO

(DIN: 02213019)

Mumbai

November 13, 2020

Compliance Certicate

In accordance with the provisions of Corporate Governance Guidelines issued by the Insurance Regulatory and

Development Authority of India, I, Dayananda V. Shetty, Company Secretary & Chief Compliance Ofcer of the

Company, hereby certify that the Company has complied with the provisions of Corporate Governance Guidelines

for Insurance companies issued by IRDAI, as amended from time to time and to the extent applicable and nothing

has been concealed or suppressed.

DAYANANDA V. SHETTY

Company Secretary &

Mumbai Chief Compliance Ofcer

November 13, 2020 FCS: 4638

32 1 3 t h A n n u a l R e p o r t 2 0 1 9 - 2 0

M32 K32

Management Discussion and Analysis Report

Macro-Economic Environment

The slowdown in the global economic activity in the second

half of 2018 continued throughout 2019 on account of

continued trade policy uncertainty, stress in emerging

market economies and geopolitical tensions. More than

this slowdown, however, the lower global demand arising

out of the COVID-19 pandemic is expected to result

in a contraction of the global economy in 2020. The

effectiveness of various pandemic containment measures

and the repercussions of the dramatic tightening in global

nancial market conditions continue to cast a further

shadow over global economic prospects. Depending

on the pathway of the pandemic and the severity of its

nancial consequences, a downside risk to economic

growth cannot be ruled out.

The growth of the Indian economy slowed down this year

primarily on account of lower gross xed capital formation,

weak private consumption and investment. According to the

estimates of Central Statistical Ofce (CSO), the GDP in FY

2019-20 grew by 4.2% in constant price terms as compared

to 6.1% for FY 2018-19. The service sectors continued to

drive growth, with their 6.9 % growth in FY 2018-19 followed

by 4.9% growth in FY 2019-20. Agriculture, forestry and

shing sectors registered a 4.0% growth, against 2.4%

growth last year. The growth of the manufacturing sector

was most impacted, slowing down from 5.7% growth last

year to 0.03% growth this year. The Government undertook

various measures to boost economic growth – such as

reduction in corporate income tax rate, merger of public

sector banks, recapitalization of public sector banks, etc.

The RBI has taken measures to shield the domestic

economy from the potential effects of the pandemic.

Nonetheless, the subdued economic activity in Q1FY21

owing to the lockdown situation resulted in a GDP de-

growth of 23.9% on a year-on-year basis. The Reserve

Bank of India expects our economy to de-grow in FY21,

with growth revival to pick up from H2FY21 onwards.

Uncertainty around COVID-19, lower domestic demand

and higher volatility in global nancial markets continue

to be downside risks to domestic economic activity.

General Insurance Industry

FY 2019-20 was another year which witnessed multiple

catastrophic events (to name a few, oods in Kerala,

Karnataka and Cyclone Fani of Odisha).

Perhaps the most important development in FY20 was

the upward revision in premiums for certain categories

of corporate risks. The premium rates in the corporate

segment had witnessed competitive pressures for many

years; thus, this revision was a timely step towards bringing

pricing adequacy in line with risk costs.

Last year, the IRDAI had introduced mandatory long term

third party insurance for new two wheelers and private

cars. This year, IRDAI introduced standalone own damage

covers for customers who held valid third party covers,

so that customers who opted for standalone third party

covers could also cover own damage risks.

The IRDAI also announced several measures in the

health insurance segment. Insurers are now allowed to

make minor modications regarding premium changes,

sum insured ranges, distribution channels, etc. without

requiring prior approval of the IRDAI, which helps them

approach the market faster. Denition of ‘pre-existing

diseases’, general clauses and exclusions are now

standardized across the industry. Lastly, Arogya Sanjeevani

Policy, an indemnity health insurance product with uniform

coverages and standardized terms & conditions across the

industry, is being offered by all insurers from April 1, 2020.

During the COVID-19 outbreak, the IRDAI undertook

various measures aimed at protecting the interests of

the insurance customers. For example, insurers were

advised to expeditiously handle health insurance claims, in

particular those pertaining to COVID-19. Also, the timeline

for payment of health and motor third party renewal

premiums was extended.

Segment-wise growth and composition

The General Insurance industry grew by 11.7% in FY20,

led by Corporate, Crop and Health segments. Owing to

revision in premiums for certain categories of risks, the

Corporate segment led the industry growth with a 17.6%

growth. Crop and Accident & Health segments registered

a growth of 16.9% and 11.5% respectively, largely on the

back of improved insurance penetration. An 18.0% de-

growth in primary vehicle sales and a nominal increase

in the premium rates for the Motor Third Party segment

resulted in the motor segment growing slowly at 7.3%.

Thus, the industry excluding crop segment witnessed a

10.7% growth on a year-on-year basis.

The segment wise composition of the industry for

FY 2019-20 was as follows (gures in brackets represent

composition for FY 2018-19): Motor 37% (38%), Accident

& Health 30% (30%), Corporate lines 17% (16%) and Crop

16% (16%).

Insurer category-wise growth and market share

During FY 2019-20, Private sector insurers (including the

standalone health insurers) grew by 13.9%, while Public

sector insurers (including the specialized insurers) grew

M33 K33

by 8.9%. Private sector insurers grew faster than Public

sector insurers across all non-crop segments (Motor,

Accident & Health and Corporate). Certain Private sector

insurers stayed away from crop segment this year, and

as a result Public sector insurers grew faster than Private

sector insurers in the crop segment.

The market share of Private sector insurers (including

standalone health insurers) increased from 54.7% in

FY 2018-19 to 55.8% in FY 2019-20.

Merger of HDFC ERGO Health Insurance Limited with the

Company

In January 2020, HDFC Ltd. acquired 51.2% shareholding

of Apollo Munich Health Insurance Company Limited after

receiving necessary approvals, renamed the company

as HDFC ERGO Health Insurance Limited (HDFC ERGO

Health). Thereafter, the merger of HDFC ERGO Health

with the Company was completed on November 13, 2020

with Appointed Date being March 1, 2020

HDFC ERGO Health is one of the leading Private sector

health insurers in India, with a deep domain expertise in

health insurance and wide network of ~98,000 agents

across the country. The merged entity is amongst the

leading private insurers in India, particularly in the

health insurance sector. The customers of the Company

now have access to the combined product bouquet of

both companies, the ‘best of both’ practices in terms

of service delivery and digitization, an ofce network

comprising 203 physical and 250+ digital ofces, and a

cashless network of 10,000+ hospitals spread across the

country. Thus, the customers of both companies stand

to benet from the merger.

The integration of HDFC ERGO Health with the Company

has been planned so as to have minimum disruption

to the business, and it progressed as per the plan

during FY 2019-20. The integration plan consists of

harmonizing the people practices of both companies,

devising new processes adopting a ‘best of both’

approach, integration of both sets of technology systems

and aligning distribution and partner relationships. The

integration exercise is expected to be largely concluded

in FY 2020-21, after which the Company shall be able

to better deliver a uniform experience to policyholders

and partners of both companies.

Performance Review- Merged basis

During the year, the gross written premium of the Company

grew from ` 8,721.8 crore to ` 9,760.1 crore, registering

a growth of 11.9%. On the protability front, our portfolio

steering measures and focus on operational efciencies

could partly offset the negative impact of catastrophic

events. Therefore, our combined ratio before the impact of

certain changes in accounting policy increased to 101.4%

as compared to 98.7% for FY19. Our prot before tax

excluding this impact increased from ` 467 crore previous

year to ` 689 crore this year.

HDFC ERGO Health would make reserves for unexpired

risks at 50% of Net Written Premium. In order to more fairly

represent the Reserve for unexpired risks, this method was

aligned with HDFC ERGO, i.e. calculated based on 1/365

method of Net Written Premium. This had an adverse

impact of ` 228 crore on the prot before tax of the

Company. The overall impact of all changes in accounting

policy and estimates to align with that of HDFC ERGO was

` 230 crore. Considering this impact, the Company

achieved prot after tax of ` 327 crore as compared to

` 383 crore last year and a combined ratio of 105.3%.

The below chart depicts the market share evolution of the

Company :

Market Share

Market Share Industry Market Share Pvt. Sector

4.0%

3.7%

4.6%

4.9%

5.1%

6.2%

8.4%

7.7%

9.8%

9.9%

9.3%

11.2%

FY15 FY16 FY17 FY18 FY19 FY20

The gures for FY20 are on merged basis.

For a better understanding of the nancial performance

during the current year, we also present below an over-

view of the nancial performance of the Company on a

standalone basis for FY20:

Performance Review – standalone basis

During the year, the gross written premium of the Company

grew by 8.2%, from ` 8,721.8 crore to ` 9,438.9 crore,

resulting in a market share of 4.9% for FY 2019-20. In

line with its strategy, the focus on Motor and Accident and

Health continued this year, and the product mix in Motor,

Accident and Health, Corporate and Crop segments was

at 36% (PY: 35%), 21% (PY: 23%), 20% (PY: 18%) and 23%

(PY: 24%) respectively.

34 1 3 t h A n n u a l R e p o r t 2 0 1 9 - 2 0

M34 K34

The Company achieved a prot after tax of ` 447.7 crore

as compared to ` 383.0 crore during the previous year,

representing a growth of 16.9%. This was driven by

portfolio steering measures to improve underwriting

protability and tight control on operating expenses.

Motor Business

Motor Line of Business registered a growth of 11%,

clocking premium of ` 3,388 crore (PY: ` 3,060

crore), increasing its share in overall business to 35%

(PY: 34%). The 11% growth was faster than the industry

growth rate of 7.3% and was noteworthy as it was

achieved in the backdrop of YoY primary motor sales

de-growth of 18%. The introduction of Motor Insurance

Service Provider (MISP) in FY18 and Long Term Motor

Policy for newly registered private cars and two-wheelers in

FY19 (Sep’18) boosted the business potential of this class

of business, relatively addressing the aspect of uninsured

vehicles and simultaneously providing customers with

wide-ranging service provider, insurer and insurance

choices. The Company collected ` 512 crore as advance

premium in FY20 and the total advance premium at the

end of FY20 stood at ` 713 crore.

With the introduction of Long Term policies, the Automotive

Practices business has been in the focus in generating

new motor premium. We are happy to inform you that

the Company continued to gain market share across the

programs and registered a growth of 13% with premium

of ` 1,248 crore. In FY20, the Company has added one

more OEM insurance program in the form of HERO

Insurance Broking and now are present in ~90% of the

OEM Insurance Programs in the country.

Motor Claims Servicing

The intimation of Motor OD Claims increased YoY by 18% in

FY20 with 5.16 lacs claims being reported. The Company

takes pride in having a fair and robust claims management

practice. Following its core values, the Company has

been able to provide a prompt response and quick claim

settlement to all the policyholders. The Settlement Ratio

of the Company was 99.8% in FY20. The Company has

helped the insured manage their claims in a collaborative

and mutually supportive manner by providing PAN-India

claims servicing across 643 districts. The repudiation rate

of the Company in FY20 and Q4 FY20 has been 1.3% &

0.9% (PY:1.80% & 2.12%) respectively which is one of the

lowest in the industry. The faster settlement turn-around-

times (TAT) and higher settlement rate resulted in an Net

Promoter Score (NPS) of 11.3 in FY20 for Motor OD Claims.

The Company has been sensitive in addressing claims

and in this regard measures taken include simplifying

procedures, especially during natural calamities to

ensure faster settlement. The Company continues to

leverage technology for improving the TAT and customer

convenience. In FY20, 85% of cashless and 74% of

reimbursement Motor Claims were paid within 24 hours

from invoice submission.

In order to enhance the customer experience through

consistency of decision making and faster response, the

Company has been investing and scaling up the digital

initiatives in Motor Claims department. By the end of the

year, the Company has been able to service 80% of the

two wheeler and 51% of the Private Car claims via digital

survey (for the full year the same stands at 56% & 24%

respectively). In order to be ahead in the technology curve,

the Company is also in the process to launch Articial

Intelligence (AI) supported survey tools for Motor OD

Claims in FY21.

Commercial Business

The commercial general insurance business continued to

remain competitive.

The hardening of premium rates in the largest component

of commercial business i.e. Property portfolio, resulted

in a robust growth of 37% with a contribution of 53% to

the Commercial portfolio. The minimum premium rates

were prescribed by the General Insurance Corporation

w.e.f. March 1, 2019 for select occupancies which were

later expanded to a whole range of 296 occupancies w.e.f

January 1, 2020, signaling positive outlook for property

Business.

Group Health and Marine portfolios still continued to

be price sensitive and with hardening of rates in re

portfolio, these two lines of business came under stress

as corporates tried to cross subsidize. We continue to write

these businesses with caution and portfolio approach.

Liability lines have seen reasonable growth with demand

for cyber insurance picking up amongst corporates.

The Company continued to build its commercial business

through Brokers, Agency as well as Bancassurance

channels. Broking channel is a key channel for corporate

business and to harness its full potential, the Company is

engaged with large and mid-segment Brokers to create the

M35 K35

portfolio spread. The contribution from broking channel to

corporate business increased to 68% in FY20 from 66%

in FY19. Mid-Market broking contribution to corporate

business increased to 9% in FY20 from 6% in FY19.

New tie ups in Bancassurance business increased our

geographical reach and penetration in distribution of

commercial products. In Agency, the Company has formed

a dedicated team to focus on SME business development.

This has resulted in Agency and Bancassurance to

contribute 17% to commercial business of the Company.

With a view to diversify, the focus was on ease of doing

business in the small and medium sector through use

of technology. Simple pre-underwritten raters were

developed targeting preferred risk segment empowering

intermediaries to provide quotes.

During FY 2019-20, commercial business recorded a

growth of 23%, with GWP increasing from ` 1,587 crore

in FY19 to ` 1,946 crore in FY20.

Accident & Health Product

Focus this year was on repricing retail agship product,

continuing our efforts to right price the group portfolio,

and navigating the new open architecture model in

Bancassurance. Overall A&H portfolio remained at during

FY 20, on a standalone basis, with gross written premium

underwritten of ` 1,941 crore (PY: ` 1,975 crore).

Within A&H, Retail health grew by 16%, faster than

the industry growth rate of 12%, thereby increasing

its contribution in A&H business to 32% (PY: 28%).

Bancassurance, the largest contributor to retail health,

faced challenges of open architecture that allows banks to

have 3 insurance partners for each of general insurance,

health insurance and life insurance. By design over last

few years, dependence for retail health on banks has

reduced. Online and Agency scale up has pushed retail

health growth. They grew by 43% and 17% respectively

in FY20.

Personal Accident (PA) contributed ~ 33% of A&H portfolio

for the Company. Bancassurance contributes ~ 87% of

PA. Increased competition led to stress on pricing in FY20

impacting both top and bottom-line.

Group Health has de-grown by 27% owing to non-renewal

of one large Government sponsored policy (Ayushman

Bharat-Chattisgarh) and few loss making Policies.

Ayushman Bharat - Chattisgarh saw premium of ` 16 crore

in FY20 (PY: ` 100 crore). Group health policies have been

underwritten very selectively in line with organizational

philosophy.

During the year, the Company’s agship health product,

Health Suraksha (HS), saw a revision in its product

features and pricing structure. Apart from adding features

like Wellness benets, installment facility and rebound

benet, to name a few, a segment pricing structure was

introduced as well. The new product has been launched

across all channels. Apart from Health Suraksha, the

Company also launched products like Women Suraksha,

Credit comprehensive and my: Credit Personal Accident

in FY20.

Strategic Alliances has added new relationships during

the year and they shall work as incubators for growth in

coming years.

In terms of operational efciency, the Company issued

92% policies in straight through mode without human

intervention, with the help of automated rule based

underwriting system.

Merger of HDFC ERGO Health with the Company is a win

win proposition for policyholders, employees, distributors

and vendors. It makes your Company the single source

for all Health products from HDFC and Munich Re Groups.

Health Insurance is one of the fastest growing line of

business and poised to become the largest single product

line in the Industry. The merged entity will have access

to the best specialized risk management expertise, large

and scalable positions in multiple channels especially

in proprietary channels such as Agency and Direct, the

ability to attract the best talent, and build a strong and

sustainable health insurance brand. The merged entity

has an exciting product line up, backed up by innovation in

service and technology, to create a differentiated customer

experience at scale.

Including the March 2020 premiums of the Transferor

Company, the Accident & Health business of the Company

stood at Rs. 2,262 crore in FY20.

Accident & Health Claims Servicing

The project undertaken for re-imagining the customer

journey in Health Care servicing has given desired results.

The turnaround time for pre-authorization requests has

36 1 3 t h A n n u a l R e p o r t 2 0 1 9 - 2 0

M36 K36

stabilized at average 14 minutes for straight through cases

while for reimbursement cases it has come down from

55 hours to 7 hours. Process efciencies were implemented

without compromising on the quality of decision making.

An AI rule engine, has been successfully deployed

in triggering suspected claims to the internal claims

investigation unit. Earlier, the static rule engine was used

and it depended on human intervention for regularly

updating rules.

All these initiatives have significantly contributed in

enhancing customer delight. As a result, the customer

calls in A&H claims have reduced from 48% to 43%

(March exit) for FY19 & FY20 respectively and improved

Net Promoter Score from 27 to 34.

Number of Claims (in '000)

372

367

424

659

2,142

1,630

FY15 FY16 FY17 FY18 FY19 FY20

The gures for FY20 are on merged basis.

Crop Insurance

Government of India announced a host of measures

for sustainable farming in the agriculture sector. One

amongst them is the Crop Insurance Scheme, Pradhan

Mantri Fasal Bima Yojana (PMFBY) which was launched

during 2016 with a goal of risk mitigation to farmers in

the event of crop failure. The aim of PMFBY is to provide

maximum insurance at minimum price for the benet of

farming community. Hence, the premium to be paid by

farmer was capped.

Crop insurance under PMFBY aims at supporting sustain-

able production in agriculture sector by way of:

• Providing nancial support to farmers suffering crop

loss/damage arising out of unforeseen events;

• Stabilizing the income of farmers to ensure their

continuance in farming;

• Encouraging farmers to adopt innovative and modern

agricultural practices;

• Ensuring credit worthiness of the farmers and their

continuance in the farming activities, crop diversi-

cation and enhancing growth and competitiveness

of agriculture sector besides protecting farmers from

production risks.

Crop insurance provides indemnity to farmers from pre-

sowing to post–harvesting stage, including the risks which

are intermediate to insured crop i.e. prevented sowing,

post harvest losses, mid season calamity payments,

localized risks for existing standing crop cover in eld.

The scheme completed 4 years of operation and was

able to reach an overall penetration level of ~30% of

Gross Cropped Area. The overall non-loanee coverage also

increased from ~20% in Rabi 2016-17 to ~40% in Rabi

2019-20. With the increased penetration of the scheme,

the Government of India issued certain directives which

increases its acceptability further. These changes are

to be implemented from Kharif 2020 and some of the

salient features are:

1. The enrollment of loanee farmers have been made

optional from the erstwhile mandatory coverage

(bundled with Kisan Credit Card);

2. The allocation of tenders will be for a xed period of

3 years as against annual / seasonal tenders being

followed currently;

3. The Sum Insured may be the Scale of nance or

(Notional Average Yield *MSP) as per State which

was earlier the Scale of Finance; and

4. 50% Central Subsidy over and above farmer share

of premium up to 25% for Irrigated crop and 30% for

un-irrigated crop from the earlier provision of equal

sharing of subsidy by the Centre and States without

any upper capping. However, the farmer share of

premium remains unchanged.

The Company has been participating in Government

sponsored Crop Insurance Scheme from 2010 onwards.

During FY17, the first year of launch of new PMFBY

scheme, the Company had covered more than 5 million

farmers in 81 districts across 7 states. During FY20, the

Company implemented the scheme in 78 districts spread

over 9 states covering more than 2 million farmers. The

Company has maintained a stable market share ranging

from ~7.5% to 9% over the years and wrote a GWP of

` 2,163.1 crore in FY 20 as against 2,099.4 crore in FY 19.

PMFBY and Restructured Weather Based Crop Insurance

Scheme (RWBCIS) insurance contracts are awarded by

the State Governments through a well dened tender

M37 K37

process wherein clusters of districts are insured for

notied crops by insurance companies basis specic

tender guidelines. The clusters are designed such that

geographical diversication is achieved. As per Internal

Underwriting Guidelines, the Company tries to achieve

geographical diversication by spreading across various

agro climatic zones.

In order to create awareness of the Scheme in rural

areas and increase penetration, the Company has

updated or upgraded its website and improved its call

center support. A strong workforce is deployed in the

eld to carry out various compliance, as desired in the

Operational Guidelines. The in-house monitoring of the

scheme implementation is being done in approximately

60% of our portfolio, ensuring better control on eld. The

Company made investments for usage of satellite based

yield forecasting and crop acreage estimation study. This is

in line with the Government of India’s thrust on increasing

usage of technology for timely and transparent claim

settlement. For this the Government of India is developing

scalable, robust and technology driven approach for direct

yield estimation at Gram Panchayat level.

Bancassurance

Bancassurance channel contributed GWP of ` 2,549

crore, de-growing by 4% over FY19 (PY: 19%). Newer

Bancassurance Partners clocked growth of 23% during

the year. Overall Bancassurance business maintained

positive growth on the onset of multiple insurance players

added in majority of our partnerships. This also allowed

the Company to decisively place its focus on portfolio

steering and take corrective actions. In addition, slowdown

amid the biggest business segment, Motor lessened

new business growth. During the year, Banca Strategic

Alliances Group gained 10 new afliations that should

aid achieving signicant scale-up in coming years. The

Company gained its 1st Public Sector Bancassurance

Partner during the course of the year - Syndicate Bank.

Investments

The Investment function complements the core business

of the Company. The investments of the Company are made

in accordance with the Investment Policy as approved

by the Board of Directors. The Investment Committee

oversees the implementation of the Investment Policy. The

Company’s investment strategy reects the coordination

between Assets and Liabilities given the nature of

business of the Company, while keeping in perspective

the regulatory framework. The Investment Policy mandate

includes maintaining high degree of liquidity and safety

of assets, optimizing returns and consistency of returns

commensurate with the risk undertaken.

As on March 31, 2020, the Investment Assets of the

Company stood at ` 11,502 crore (PY: ` 9,104 crore).

The IRDAI (Investment) Regulations, 2016 requires

Non-Life companies to invest 30% of their Investment

Assets in Government and approved Securities, 15% in

Infrastructure sector and Housing sector. The Company

held ` 4,922 crore (42.8%) in Government securities,

` 3,552 crore (30.9%) in securities of the Infrastructure

and Housing sector and remaining ` 3,027 crores (26.3%)

in approved and other investments. The Company held

90% of its assets in Sovereign and AAA or equivalent

rated assets, reecting high degree of safety. Further, the

Company held ` 1,494 crore in assets maturing within

one year. The total investment income for the year ended

March 31, 2020 was ` 867 crore. On a merged basis, as

on March 31, 2020 the total Investment Assets of the

Company stood at ` 13,577 crores of which ` 5,587 crore

(41.2%) in Government securities, ` 4,100 crore (30.2%)

in securities of the Infrastructure and Housing sector and

remaining ` 3,889 crores (28.6%) in approved and other

investments. The total investment income for the year

ended March 31, 2020 was ` 881 crore.

41.2%

30.2%

28.6%

Portfolio Mix - Investments

Govt./approved Securities Infrastructure & Housing Sector

Other approved Investments

Claims Reserves

The outstanding claims liability is measured as the central

estimate of the expected future ultimate payments relating

to claims incurred at the reporting date. The ultimate

claims liability is measured based on the advice of/

valuations performed by, or under the direction of, the

Appointed Actuary. The expected future payments include

those in relation to claims reported but not yet paid or not

yet paid in full, claims incurred but not enough reported

38 1 3 t h A n n u a l R e p o r t 2 0 1 9 - 2 0

M38 K38

(` in crore)

Gross Incurred Losses and Allocated Expenses (Ultimate Movement)

As at March 31, 2020 AY 10 AY 11 AY 12 AY 13 AY 14 AY 15 AY 16 AY 17 AY 18 AY 19 AY 20

End of First year 452 741 770 1,065 2,178 2,636 2,923 5,007 5,616 7,049 8,236

One year later 442 734 846 1,103 2,323 2,547 2,980 4,788 5,332 6,951

Two years later 444 747 833 1,050 2,293 2,535 3,112 4,874 5,284

Three years later 453 753 781 1,116 2,289 2,638 3,121 4,860

Four years later 455 754 801 1,080 2,363 2,636 3,120

Five years later 458 767 806 1,144 2,369 2,621

Six years later 461 768 810 1,150 2,376

Seven years later 465 779 819 1,149

Eight years later 467 777 818

Nine years later 470 783

Ten years later 470

(IBNER), claims incurred but not reported (IBNR) and the

anticipated direct and indirect claims handling costs. While

estimating the future ultimate claims liability, no allowance

is made for discounting of reserves or negative provisions

for any particular year of occurrence in compliance with

IRDAI regulations. The ultimate liability is estimated using

established actuarial methods depending on the class

of business and nature of claims. The ultimate claims

reserves are estimates involving actuarial projections at

a given time, of what the Company expects the ultimate

settlement of claims will cost.

The claims reserve for the Motor Third Party liability

portfolio comprises signicant proportion of the Company’s

total liability. The claims for Motor Third Party liability are

characterized by relatively longer time delay for reporting

and settlement of claims. Thus, the ultimate claim

liabilities are estimated basis available information at

the valuation date and assumptions around future trends

in claims severity and frequency, judicial rulings and

other factors. Further, the assumptions are inuenced

by the Company’s claims handling procedures, ination,

minimum wages, court decisions, legislative changes,

customer behaviour, claims reporting delays etc. The

ultimate reserves are adjusted with emerging claims

experience.

The table below provides an overview of development of

the Company’s (including those of HDFC ERGO Health

Insurance Limited) estimates of gross ultimate claim

amounts and gross paid losses (including loss adjustment

expenses) in relation to a given accident year over time.

This information has been provided for recent 10 years.

This estimate of losses and their corresponding provision

is increased or decreased as more information becomes

known about the development of losses for each individual

accident years.

M39 K39

(` in crore)

Gross Paid Losses and Loss Adjustment Expenses

As at March 31, 2020 AY 10 AY 11 AY 12 AY 13 AY 14 AY 15 AY 16 AY 17 AY 18 AY 19 AY 20

End of First year 284 411 424 548 1,263 1,390 1,808 2,071 2,706 3,882 3,810

One year later 373 597 637 840 1,801 2,020 2,387 3,779 4,191 5,310

Two years later 412 641 705 903 1,928 2,186 2,594 4,224 4,373

Three years later 425 663 725 948 2,000 2,279 2,725 4,307

Four years later 430 677 739 973 2,053 2,350 2,807

Five years later 434 692 749 1,006 2,098 2,397

Six years later 443 702 762 1,025 2,132

Seven years later 446 713 771 1,071

Eight years later 447 722 777

Nine years later 449 726

Ten years later 457

(` in crore)

Gross Unpaid Losses and Loss Adjustment Expenses

As at March 31, 2020 AY 10 AY 11 AY 12 AY 13 AY 14 AY 15 AY 16 AY 17 AY 18 AY 19 AY 20

End of First year 167 331 346 516 915 1,246 1,115 2,936 2,910 3,167 4,426

One year later 70 137 210 264 522 527 593 1,009 1,141 1,641

Two years later 31 106 128 146 366 349 517 649 911

Three years later 28 90 56 168 289 359 395 553

Four years later 24 77 62 107 309 286 312

Five years later 24 75 57 138 272 224

Six years later 18 66 48 125 243

Seven years later 19 66 47 78

Eight years later 19 55 41

Nine years later 21 57

Ten years later 13

Note:

1. Pool claims are excluded from the above table.

2. For Crop and Weather Insurance class of business, Accident Year corresponds to the year in which Premium is received.

3. The impact on the unpaid claims liability of the Company on account of landmark judgements issued by the Supreme Court of India and various

High Courts

e.g. Sarla Verma (April 2009) Pranay Sethi (October 2017) etc. has been allowed for in the claims ultimate.

40 1 3 t h A n n u a l R e p o r t 2 0 1 9 - 2 0

M40 K40

Reinsurance

The Company’s reinsurance programme is designed

to ensure protection against exposure to large losses

affecting single risks as well as catastrophic loss events

affecting multiple risks across portfolios. As per regulatory

requirements, the Company has ceded 5% of its business

to General Insurance Corporation of India (GIC).

The Company had a successful reinsurance renewal for

FY20. The Company experienced a few risk losses and

a CAT loss on account of oods in Kerala in FY 19. The

impact on net account was signicantly reduced due to

adequate reinsurance protection.

The Company has a strong reinsurance panel comprising

of the National Reinsurer - GIC, foreign reinsurers who

have set up their branches in India and cross border

reinsurers with nancial strength rating of A- and above.

Operations, Technology and Customer Experience

Management

HDFC ERGO continues to be one of the largest General

Insurance providers in India. With an aspiration and aim

to become the preferred General Insurance provider in the

country, HDFC ERGO is taking all the necessary steps to

ensure the growing market share in the industry.

The situation arising from COVID-19 pandemic towards the

end of the year, has thrown in many unexpected challenges

and our teams have successfully implemented the

business continuity plan to ensure the smooth processing

of all important business operations.

Key Initiatives:

With continuous exploration as the DNA of the organization

to being future ready, the Company focussed on leveraging

new age technologies to achieve key business objectives

of providing superior customer experience and enhanced

productivity. A host of technology driven projects were

implemented in FY20 to further our vision of being a Digital

First Insurance Company:

- Articial Intelligence (AI) enabled Natural Language

Processing (NLP) platform christened ‘eRA’ - our email

automation platform to address customer requests

in an automated fashion almost real time. The

platform is able to address 24% of service requests

with accuracy without any human intervention. We

will continue to enhance the platform by training

on additional scenarios to process the customer

servicing requirements in straight through mode by

integrating with the IT eco-system.

- Implemented the concept of Bionic to enhance the

sales function by introducing various improvisations

in mobile enabled sales app (Ovalite) with respect

to Agency Management, Business Review, Tracking,

Lead Management and Enhanced engagement

management.

- The Company introduced servicing through Whatsapp

– a much awaited channel which takes customer

servicing to a new level providing instantaneous

resolutions. Equipped with process automation

and a Chat Bot which uses the best-in-class NLP

tools available in the market, it makes the servicing

completely automated without a need for human

intervention.

Customer Experience is riding on a new wave of Digital

Servicing at HDFC ERGO and furthering our infrastructure

that has been created over the last years to provide an

easy, seamless and completely digital ecosystem. We are

continually evaluating new journeys and re-imagining the

existing ones to offer an unparalleled customer experience

which is evidenced by the fact that our digital footprints

are increasing manifold with a 100% growth in the online

transactions over previous year.

Claims, being the moment of truth for our customers, we

have stayed focussed on improving the user journey to

ensure that Health claims become simple and hassle free.

The Company has created a complete digital experience

on its website from claim intimations to status updates

and submission of supporting documents, completely

eliminating the need to submit physical documents for

claims. This also enhances the customer experience by

retaining original medical records for future reference and

continuity of treatment.

In line with the Health claims, Motor claims were made

simpler by offering various modes of intimation over

Integrated Voice Response (IVR), Website and Whatsapp,

completely digital and instant.

The Company is also embracing new technologies to

engage with customers through Automated Voice Calls for

status updates, Whatsapp for sharing policy documents

and pre-emptive servicing over IVR for status related to

transactions.

The digital ecosystem has accelerated the growth of our

Digital Business, both Direct as well as Partner Business.

M41 K41

- Digital Direct has increased its in-house capabilities

by on-boarding SEO/SEM experts and UI/UX

designers while also improving call center assistance

efciencies resulting in higher conversions.

- On Digital Partner front, while the major partners

have continued to contribute to the major portion of

the business, the wallet share in smaller partners

has started increasing too. Many new partnerships

have also been added; the number of partners

increased from 61 in FY19 to 71 in FY20.

The Company’s focus on employee engagement and

learning was strengthened by launching a video platform

which ensured that all the knowledge sharing sessions

become location agnostic and are streamed live by which

employees can have access at all the branches. The

platform maintains the video library of all the knowledge

sharing sessions with enhanced features to be able to view

anytime anywhere using any device like laptop, desktops

and/or handheld devices.

While we are going digital at a rapid pace, we do appreciate

the associated risks and hence, the Company’s belief

and commitment in information and data security of its

policyholders is based on Information Security Management

and Cyber Security frameworks. The framework is built

on strong foundation of robust policies, procedures with

measures and controls across all departments and branch

locations. The Company further strengthened its security

architecture by various initiatives and reached to the cyber

security maturity level of “Quantitatively Managed”.

The lock down due to COVID 19 pandemic presented

us with novel challenges and the teams together came

stronger to ensure business continuity and Business-As-

Usual environment. ‘Work From Home (WFH)” enablement

was done almost overnight with most employees across

teams enabled with systems to provide continuity of

operations. From Call Center team which was enabled

to take calls from home to Sales function for lead

management & renewal calling, and Operations to

process policies remotely, teams presented innovative

solutions to ensure continuity of business operations. We

will continue to bring in new initiatives to improvise the

overall functioning.

The Company will remain focused on exploration of new

age Cognitive technologies including Speech Recognition,

Robotics, Natural Language Processing and Generation

with advance analytics in various aspects to improve

customer experience and operational efciencies.

We understand that customers are now looking at hyper

personalized and meaningful conversations across a

variety of preferred platforms and being focused on digital

gives us the opportunity to adapt to the new normal to

make it a way of life.

Number of Policies Sold ('000)

4,224

4,864

5,083

6,504

8,475

10,443

FY15 FY16 FY17 FY18 FY19 FY20

The gures for FY20 are on merged basis.

Distribution Network

The Company follows a multi-geography, multi-product and

multi-channel distribution strategy.

The corporate business grew across protable products,

and across direct and broking channels.

The retail business grew across geographies and across the

Agency, MISP and Online channels. In line with the banking

industry in general, our bank partners witnessed slow

growth in their business this year. Therefore, the growth of

our Bancassurance business was muted this year.

Consequent to the merger, the distribution network of the

Company has strengthened, particularly in the agency

channel. The Company has an agent network of 15,491

General Insurance Agents and 98,072 Health Insurance

Agents, making it one of the largest networks in the

General Insurance industry. Likewise, the Company has 56

Bank/ Corporate Agent partners for distributing General

Insurance products and another 30 Bank/ Corporate

Agent partners for distributing Health Insurance products.

The Company continues to focus on growth across its

Bancassurance, Agency, Broking and Direct channels,

and on growing the share of its retail business from small

cities. Online sales and Common Service Centre (CSC)

continue to be the Company’s focused alternate channels

for distribution.

42 1 3 t h A n n u a l R e p o r t 2 0 1 9 - 2 0

M42 K42

The merger has also enabled the Company access to

the 194 branch ofces of the Transferor Company. The

Company has optimized its branch presence and now is

present in 203 branch ofces as compared to 129 branch

ofces prior to the merger.

Channel wise Gross Written Premium

31.6%

15.8%

6.1%

29.1%

11.2%

6.1%

Agent Broker Corporate Agent

Bancassurance

Direct

Web Aggregator/CSC & Others

Human Resources (HR)

For the Company, employees remain critical to its

success. To continue to enable the business growth, the

Company increased its employee strength from 3,391 in

FY19 to 3,899 in FY20 and 6868 for merged Company

The Company follows the principle of consistent and

transparent HR practices with people at the center of all

decision making.

The HR team continued its journey towards improving

internal efciencies and initiatives to foster happiness

at work, hire the right talent, retain the best talent and

integrate them seamlessly into the Company’s fold and

encourage employees through robust recognition and

learning programs.

The Company continues to grow and focus on areas of

digital solutions; HR innovation, business partnering

and most importantly people connect. In order to ensure

process efciencies, the Company continued its efforts

toward automation in areas of Talent Acquisition and TPV

Management.

Subsequent to acquisition of HDFC ERGO Health Insurance

Limited by HDFC Limited, a reputed HR consultant was

appointed to advise the Company on the people / process

integration and change management process.

Employee Productivity (GWP per Employee)

1.62

1.73

2.47

2.49

2.57

2.31

FY15 FY16 FY17 FY18 FY19 FY20

Productivity (in crore)

The gures for FY20 are on merged basis.

Risk Management

The Company has a robust and integrated enterprise wide

Risk Management Framework (RMF) to identify, assess,

manage and mitigate all relevant risks in the Company’s

operating environment. The RMF works at all levels across

the Company and is a proactive institution-wide program. It

has been aligned and integrated with business processes

and covers all relevant risks including Strategic risks,

Operational risks, Investment risks, Insurance risks and

Information & Cyber Security risks. The Risk Strategy is

embedded in the business planning process.

Under the RMF, periodic and realistic assessment of the

risk exposure is conducted based on the impact and the

likelihood of the occurrence of the risk.

The Company’s Risk Management is overseen by the

Risk Management Committee of Directors. The Board

approved Risk Management Policy & Manual provides the

framework and guidelines for management and mitigation

of all risks associated with the business of the Company.

The risk performance is comprehensively reviewed by the

Risk Management Committee at its quarterly meetings.

The Company’s Investment Function is overseen by

the Investment Committee constituted by the Board of

Directors. The Board approved Investment Policy and the

Investment Standard Operating Guidelines provides the

framework for management and mitigation of the risks

associated with investments. The investment portfolio

and its performance is comprehensively reviewed by the

Investment Committee and the Board of Directors at its

quarterly meetings.

M43 K43

The Company also assigns critical importance to

Information and Cyber Security Risks. Accordingly, the

Company has an Information Security and Business

Continuity framework within the RMF that ensures all the

information assets are adequately protected by instituting

required controls. The controls are assessed periodically to

determine the adequacy and effectiveness of the controls

instituted.

The Company had done an independent assessment

for Capability Maturity Model Integration (CMMi) of its

Information & Cyber Security processes to benchmark its

practices against the globally recognized CMMi standard.

As per the results of the independent assessment exercise

the Company’s overall Cyber & Information Security has

been assessed as “Processes are strong, continuously

monitored and measured”

The Internal Audit function is an independent function

of the Company. Risk based audits of processes and

branches are conducted as per Annual Audit Plan

approved by the Audit and Compliance Committee (ACC).

The planning and conduct of internal audits is focused

towards assessing the existence and design of controls

and to provide a reasonable assurance on the operating

effectiveness of internal controls. Key observations arising

out of audits conducted by Internal Audit are presented

to the ACC on a quarterly basis. Signicant ndings are

tracked and monitored to conrm implementation on

remediation plans.

Risk and Loss Mitigation

The Company has a dedicated Risk and Loss Mitigation

Unit (RLMU) which implements the Fraud Management

Framework of the Company. It primarily endeavours to take

all the possible steps to prevent, detect and mitigate risks

emanating from various types of frauds to the Company.

It relies on various automated tools using predictive

modelling, analytical engines and AI based solution

toag claims suspected to be fraudulent ,dynamically

and seamlessly. It also investigatesthe complaints by

whistleblowersand ensures appropriate actions taken

thereof accordingly. Cyber and Forensic expertise are

utilized to investigate the important cases. Apart from

these, it also handles ling of complaints with the police

on fraud cases, initiates recoveries of the stolen assets

and takes legal action against the fraudsters.

The department is ISO 9001:2015 certied.

Solvency

An insurance company is considered to be solvent if

its assets are adequate and liquid to pay off claims or

liabilities as and when they arise. The solvency ratio

is used to assess this. Thus, an insurance company’s

solvency ratio indicates its claim paying ability; higher the

solvency ratio, better the claim paying ability.

As on March 31, 2020, the Company had a solvency ratio

of 1.78 as against the minimum regulatory requirement of

1.50 [Available Solvency Margin (ASM) ` 3,105.66 crore

and Required Solvency Margin (RSM) ` 1,742.96 crore].

Solvency Ratio

1.65

1.67

1.71

2.06

1.75

1.78

1.50

1.50 1.50 1.50

1.50

FY15 FY16 FY17 FY18 FY19 FY20

Actual Requirement

The gures for FY20 are on merged basis.

Future Outlook

While the industry has grown at a CAGR of 17% over the

last 19 years, the insurance penetration as % of GDP as

of 2019was at 0.94%, which continues to be low vis-à-vis

comparable economies. Low insurance penetration levels

across retail lines such as Motor, Accident, Health, Home,

asset creation potential in commercial lines and improved

insurance awareness shall continue to provide growth

opportunities for the industry over the medium term.

In the near term, the industry growth in FY21 is likely to

be muted on account of the contraction of the domestic

economy expected as a result of the lockdown in the rst

half of the year.

While the low levels of penetration shall continue to

attract new entrants at one end, the recent regulatory

changes are expected to nudge the insurers to make their

processes and risk management frameworks more robust.

The Company believes that, over the coming years, the

growth potential of the domestic economy and recent

regulatory changes will result in strong growth and

improve the protability of the industry. The Company

would continue to innovate, use technological solutions

and strive to provide better policyholder and stakeholder

propositions in the future.

Disclaimer: This report contains forward-looking statements

based on beliefs of HDFC ERGO’s management. The words

‘expected’, ‘estimate’, ‘believe’ and ‘intend’ used to identify

forward-looking statements, reects the Company’s current

views with respect to the future events and are subject to risks

and uncertainties. Many factors could cause the actual result

to be materially different, including, amongst others, changes

of competitors / competing products, lack of acceptance of new

products and may vary materially from those projected here.

HDFC ERGO does not intend to assume any obligation to update

these forward-looking statements.

44 1 3 t h A n n u a l R e p o r t 2 0 1 9 - 2 0

M44 K44

ANNUAL REPORT ON CSR ACTIVITIES

1. A brief outline of the Company’s CSR policy,

including overview of projects or programs proposed to

be undertaken and a reference to the web-link to the CSR

policy and projects or programs

A. CSR Policy

The CSR Policy of the Company inter-alia species the

broad areas of CSR activities that could be undertaken

by the Company, approach and process for undertaking

CSR projects and the monitoring mechanism.

The Policy is available on the website of the Company -

www.hdfcergo.com.

B. Organization setup

The CSR projects are implemented under the guidance

of the CSR Committee of Directors, which presently

comprises six (6) Directors. The Company has a Sub-

Committee of CSR (SC-CSR) comprising of the Senior

Management team including Whole Time Directors.

The terms of reference of the CSR Committee inter-alia

includes:

(i) Formulate and recommend CSR Policy to the Board

for approval.

(ii) Recommend for approval of the Board, the amount

of expenditure to be incurred on CSR activities in a

nancial year along with projects to be undertaken

earmarking funds for broad area wise projects.

(iii) Monitor from time to time the implementation of the

CSR projects undertaken by the Company. Evaluation

and reporting of projects and programs implemented

to the Board of Directors.

C. Scope of activities

The CSR activities of the Company are as per the

provisions of Schedule VII of the Companies Act, 2013.

i. Geographical Span of CSR Projects

The CSR activities are taken up primarily in and around

areas near HDFC ERGO’s places of business. At least

70% of the amount earmarked for CSR activities is spent

in these areas under the ‘Gaon Mera’ initiative which

addresses the need for wholesome education in Rural

India. The balance 30% funds are spent on other CSR

activities.

ii. Planning

The identication of CSR activities is done using one or

combination of the following methods:

(i) In-house planned projects.

(ii) Proposals from District Administration / Local Govt.

body/public representatives etc.

(iii) Proposals/requests from a registered and specialized

body for providing nancial assistance for carrying

out specic CSR initiatives subject to the condition

that it fullls the criteria as prescribed in the statute

in this regard.

iii. Implementation Methodology

The CSR activities / projects are implemented using

internal resources or through collaborating with NGOs /

specialized agencies / trusts / institutions / foundations

/ societies / Government bodies etc. in accordance with

provisions of the Act and the Companies (Corporate Social

Responsibility Policy) Rules, 2014.

The details of major CSR initiatives undertaken by the

Company during the nancial year 2019-20 are given

below:-

I. Gaon Mera Government School Reconstruction &

Development Project In 4 Identied Villages -

The focal area for the Company’s CSR intervention is

a dedicated “Adopt Village” programme called “GAON

MERA”. The program is aimed at improving the current

status of Education, Healthcare, Sanitation and Livelihood

in selected village/s.

The Company has selected villages through an internal

employee nomination program in four states of India

namely Madhya Pradesh, Karnataka, Gujarat and Bihar.

Under “Gaon Mera FY20”, the Company adopted four

villages namely Jamkhar, Jabalpur District in Madhya

Pradesh, Domabaramattur, Haveri District in Karnataka,

Mithivavdi, Patan District in Gujarat and Singachauri,

Sitamadhi District in Bihar. The Company aims to work

holistically towards development of education with all

relevant stakeholders in these villages on Government

School reconstruction program to make a sustainable

impact in the lives of the marginalized communities living

in these villages. The major part of the expenditures on

these projects has been met from CSR spend of FY20 and

balance shall be met from CSR spend of FY21.

Charities Aid Foundation (CAF India) and Yuva Unstoppable

are working as Implementation Partners for above

activities.

The main objective of the program is to address the

need for sustainable educational infrastructure, support

system for rural development and holistic advancement of

education in the communities. The project works towards

sustainable development in core focus area of education

in the selected village(s).

Preliminary evaluation in the start-up phase was done

by Implementation Partner in the form of rapid need

assessment and development of project proposal.

Government School Construction Project is adopted

using BaLA (Building as Learning Aid), an innovative

concept for qualitative improvement in education, through

M45 K45

developing child-friendly, learning and fun based physical

environment.

2. Composition of the CSR Committee

Mr. Ameet Hariani - Independent Director -

Chairman

Mr. Deepak S. Parekh - Non - Executive Director

Mr. Mehernosh B.

Kapadia

- Independent Director

Ms. Renu S. Karnad - Non - Executive Director

Mr. Theodoros Kokkalas* - Non - Executive Director

Dr. Oliver Martin Willmes* - Non-Executive Director

Mr. Anuj Tyagi - Executive Director &

CBO

*Dr. Oliver Martin Willmes was inducted as a Member of the Committee

in place of Mr. Theodoros Kokkalas w.e.f October 12, 2020.

(d) Manner in which the amount spent during the nancial year is detailed below –

1 2 3 4 5 6 7 8

Sr.

No.

Projects / Activities Sector Projects or programs

(1) Local area or other

(2) Specify the State

and district where

projects or programs

was undertaken

{District (State)}

Amount outlay

(budget)

project or

programs –

wise (` )

Amount spent on projects

or programs Sub-heads:

(1) Direct expenditure on

projects or programs (2)

Overheads (` )

(During FY 20)

Cumulative

expenditure up

to the reporting

period (` )

Amount

spent: Direct

or through

implementing

agency

Reconstruction project of Govt.

School in 3 villages under Gaon

Mera FY19 Projects

Overall

development of

Govt. school by

reconstruction

and enriching

resources

with focus on

Education

Agraharam, Anantpur,

Andhra Pradesh

10,796,101 Direct expenditure:

4,318,440

Overheads–Nil

10,796,101

Through

implementing

partner

CAF-India.

2 Pandiya Pathar,

Ganjam, Odhisa

11,433,911 Direct expenditure :

4,573,564

Overheads–Nil

11,433,911

3 Tandia, Varanasi,

Uttar Pradesh

9,935,540 Direct expenditure :

3,974,216

Overheads–Nil

9,935,540

4 Construction of Community Hall

of Govt. School in village under

Gaon Mera FY19 Projects

Sarsai, Kullu,

Himachal Pradesh

4,124,821 Direct expenditure :

1,237,446

Overheads–Nil

3,712,339

Reconstruction project of Govt.

School in 4 villages under Gaon

Mera FY20 Projects

Overall

development of

Govt. school by

reconstruction

and enriching

resources

with focus on

Education

Jamkhar, Jabalpur,

Madhya Pradesh

7,360,000 Direct expenditure:

6,624,000

Overheads–Nil

6,624,000 Through

implementing

partner

CAF-India.

6 Domabaramattur,

Haveri Karnataka

10,284,836 Direct expenditure:

9,256,353

Overheads–Nil

9,256,353

Through

implementing

partner Yuva

Unstoppable

Mithivavdi, Patan,

Gujarat

8,388,594 Direct expenditure:

7,307,790

Overheads–Nil

7,307,790

8 Singachauri,

Sitamarhi, Bihar

12,036,747 Direct expenditure:

3,611,025

Overheads–Nil

3,611,025

9 Supply of free Sanitary Napkins

to 10,000 Girl child in rural/

semi-urbanareas

Health care PAN India 5,000,000 Direct expenditure:

5,000,000

Overheads–Nil

5,000,000 Through CSC

Academy

10 Cataract surgery for needy

(Rastriya Netra Yagna)

Health care PAN India 5,000,000 Direct expenditure:

5,000,000

Overheads–Nil

5,000,000 Through Vision

Foundation of

India

3. Average net prot of the Company for last three

nancial years: ` 362.30 crore

4. Prescribed minimum CSR Expenditure (two percent

of the amount as in item 3. above) : ` 7.25 crore

5. Details of CSR spent during the nancial year:

(a) Total CSR amount to be spent for the nancial

year: ` 7.25 crore

(b) Amount spent during the year: ` 7.27 crore

46 1 3 t h A n n u a l R e p o r t 2 0 1 9 - 2 0

M46 K46

1 2 3 4 5 6 7 8

Sr.

No.

Projects / Activities Sector Projects or programs

(1) Local area or other

(2) Specify the State

and district where

projects or programs

was undertaken

{District (State)}

Amount outlay

(budget)

project or

programs –

wise (` )

Amount spent on projects

or programs Sub-heads:

(1) Direct expenditure on

projects or programs (2)

Overheads (` )

(During FY 20)

Cumulative

expenditure up

to the reporting

period (` )

Amount

spent: Direct

or through

implementing

agency

11 Provided nutrient quality meals

to underprivileged students/

children

Education Mumbai, Maharashtra 500,000 Direct expenditure:

500,000

Overheads-Nil

500,000 Through Cosmic

Divine Society

12 Sponsoring education of 15

Girl Children

Education Bangalore, Karnataka 150,000 Direct expenditure:

150,000

Overheads-Nil

150,000 Ved Vignan

Maha Vidya

Peeth

13 Utensils/Vessels Kit distributed

for ood relief

Flood relief 4 villages of Sangli

District, Maharashtra

731,280 Direct expenditure:

731,280

Overheads-Nil

731,280 Direct

14 Financial assistance and

extending co-guardianship to

special adults of ADHAR

Health care PAN India 1,980,000 Direct expenditure:

1,980,000

Overheads-Nil

1,980,000 Through

Association

of Parents

of Mentally

Retarded

Children,

Mumbai

(ADHAR)

15 Financial assistance and

extending support for providing

scholarship to Girl Child

Education 3 Districts namely

Wardha, Amravati

and Nagpur in

Maharashtra

5,207,250 Direct expenditure:

1,735,750

Overheads-Nil

1,735,750 Through Lila

Poonawalla

Foundation

16 Support in Project Save Little

Hearts

Health care PAN India 3,360,000 Direct expenditure:

3,360,000

Overheads-Nil

3,360,000 Through

Genesis

Foundation

17 Provided support for Cochlear

Implant treatment and

Bone Marrow Transplant to

economically challenged kids

for medical procedures at SRCC

Children’s Hospital

Health care 9 Districts in

Maharashtra

2,000,000 Direct expenditure:

2,000,000

Overheads-Nil

2,000,000 Through The

Society for the

Rehabilitation

of Crippled

Children (SRCC)

18 Provided support to poor

children undergoing cancer

treatment

Health care Andhra Pradesh and

Tamil Nadu

2,000,000 Direct expenditure:

2,000,000

Overheads-Nil

2,000,000 Through

Ray of Light

Foundation

19 COVID-19 Support-Purchase

of 20000 bottles of 500ml

Sanitizer for Mumbai Police

Health care Mumbai, Maharashtra 2,160,000 Direct expenditure:

2,160,000

Overheads-Nil

2,160,000 Direct

20 COVID-19 Support-Purchase

of 44505 cotton mask for

Mumbai Police

Health care Mumbai, Maharashtra 890,099 Direct expenditure:

890,099

Overheads-Nil

890,099 Direct

21 COVID-19 Support-Purchase of

5000 face mask N95 for BMC

run Nair Hospital and Kasturba

Hospital

Health care Mumbai, Maharashtra 1,165,500 Direct expenditure:

1,165,500

Overheads-Nil

1,165,500 Direct

22 COVID-19 Support - 9

ventilators to hospitals through

Narayana Hrudalaya Charitable

Trust

Health care New Delhi 5,040,000 Direct expenditure:

5,040,000

Overheads-Nil

5,040,000 Through

Narayana

Hrudalaya

Charitable Trust

22 Other Expenditure– Workshop/

Printing

Others Mumbai, Maharashtra 54,000 Direct expenditure:

54,000

Overheads-Nil

54,000 Direct

TOTAL – CSR spend-FY20 72,669,463

M47 K47

As against required CSR spend of ` 72,460,377 during

FY 2019-20, the Company spent ` 72,669,463 which has

been fully disbursed.

In respect of four Government school reconstruction

project, the total estimated outlay is ` 38,070,177 out of

which ` 26,799,168 has been disbursed and considered

as CSR spend of FY20. The balance amount will be spent

and disbursed in FY21 as part of CSR spend of FY21.

Note 1: Charities Aid Foundation (CAF) India is a registered

charitable trust set up in 1998 to provide strategic and

management support to corporate, individuals and NGOs

with an aim to ensure greater impact of their philanthropic

and CSR investments. It is a leading international not-

for-prot organization, which works to make giving more

effective and charities more successful. CAF India is part

of an international network with ofces in nine countries,

including Australia, Brazil, Canada, India, Russia, South

Africa and the United States of America and distributes

funds to over 90 countries around the world. CAF India,

with its dedicated team of experts, brings development

sector knowledge and experience to take ‘Giving’ further.

CAF has more than a decade long proven track record of

conducting due diligence of non-government organizations

across India and has gained the trust of many individuals,

national and transnational companies, Foundations

and institutions. CAF India has a wide range of ‘Giving’

solutions which include corporate giving, Give as You

Earn, Individual giving etc. CAF has an impeccable

record of serving large multinationals, Public Sector

Undertakings, Indian commercial giants by delivering their

CSR commitments successfully.

Note 2: Yuva Unstoppable is a not for prot registered

organization with an aim to make a difference in the lives

of children at the bottom of the pyramid. Yuva Unstoppable

was set up twenty years back and that’s when Yuva began

to take shape as a group of zealous individuals with the

passion to spread kindness. Co-founded by Amitabh

Shah in 2005, it has to date mobilized over 1.5 Lac

youth ambassadors, change makers, and smaratarian

volunteers to impact over 6 lac children across 1500

government schools in about 14 states of the country.

The model of action of Yuva Unstoppable is based on

inspiration. Yuva Unstoppable are working with 100 top

corporate partners and inspire children for greatness,

a pursuit of happiness, and awareness in the smallest

of things. Yuva Unstoppable rely on the strength of its

volunteers and the power of youth to create a systematic

and organic chain reaction to effect positive change in

the society.

The CSR Committee of the Company hereby conrms

that the implementation and monitoring of CSR Policy

is in compliance with CSR objectives and Policy of the

Company.

Anuj Tyagi Ameet P. Hariani

(Non Executive Director) (Chairman - CSR Committee)

(DIN: 07505313) (DIN: 00087866)

Note

The CSR spend of ` 2,300,000 by the Transferor Company between March 1, 2020 to March 31, 2020 is not considered

for reporting in the aforesaid report.

48 1 3 t h A n n u a l R e p o r t 2 0 1 9 - 2 0

M48 K48

Secretarial Audit Report for the Financial Year Ended 31st March, 2020

[Pursuant to Section 204(1) of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration

of Managerial Personnel) Rules, 2014]

To,

The Members,

HDFC ERGO General Insurance Company Limited

CIN: U66030MH2007PLC177117

We have conducted the secretarial audit of the

compliance of applicable statutory provisions and the

adherence to good corporate practices by HDFC ERGO

General Insurance Company Limited (hereinafter called

“the Company”). Secretarial Audit was conducted in a

manner that provided us a reasonable basis for evaluating

the corporate conducts/statutory compliances and

expressing our opinion thereon.

Based on our verication of the Company’s books,

papers, minute books, forms and returns led and

other records maintained by the Company and also the

information provided by the Company, its ofcers, agents

and authorised representatives during the conduct of

secretarial audit, we hereby report that in our opinion,

the Company has, during the audit period covering the

nancial year ended on 31st March, 2020 complied

with the statutory provisions listed hereunder and also

that the Company has proper Board-processes and

compliance-mechanism in place to the extent, in the

manner and subject to the reporting made hereinafter:

We have examined the books, papers, minute books,

forms and returns led and other records maintained by

the Company for the nancial year ended on 31

March,

2020 according to the provisions of:

i. The Companies Act, 2013 (the Act) and the Rules

made thereunder;

ii. The Securities Contracts (Regulation) Act, 1956

(‘SCRA’) and the rules made thereunder;

iii. The Depositories Act, 1996 and the Regulations and

Bye-laws framed thereunder;

iv. Foreign Exchange Management Act, 1999 and

the rules and regulations made thereunder to the

extent of Foreign Direct Investment. The Company

does not have any Overseas Direct Investment

and External Commercial Borrowings during the

nancial year;

v. The following Regulations and Guidelines prescribed

under the Securities and Exchange Board of India

Act, 1992 (‘SEBI Act’):-

a. The Securities and Exchange Board of

India (Substantial Acquisition of Shares and

Takeovers) Regulations, 2011

;

b. The Securities and Exchange Board of India

(Prohibition of Insider Trading) Regulations,

2015;

c. The Securities and Exchange Board of India

(Issue of Capital and Disclosure Requirements)

Regulations, 2018

;

d. The Securities and Exchange Board of India

(Share Based Employee Benets) Regulations,

2014

;

e. The Securities and Exchange Board of

India (Issue and Listing of Debt Securities)

Regulations, 2008;

f. The Securities and Exchange Board of India

(Registrars to an Issue and Share Transfer

Agents) Regulations, 1993 regarding the

Companies Act and dealing with client;

g. The Securities and Exchange Board of India

(Delisting of Equity Shares) Regulations,

2009

; and

h. The Securities and Exchange Board of India

(Buyback of Securities) Regulations, 2018

;

The Regulations or Guidelines, as the case may be

were not applicable for the period under review.

The list of Acts, Laws and Regulations specically

applicable to the Company are given below:

vi. The Insurance Act, 1938, as amended.

vii. The Insurance Regulatory and Development

Authority Act, 1999, as amended and Regulations

framed thereunder and as amended from time to

time.

We have also examined compliance with the applicable

clauses of the following:

i. Secretarial Standards issued by The Institute of

Company Secretaries of India and

ii. The Securities and Exchange Board of India

(Listing Obligations and Disclosure Requirements)

Regulations, 2015 [“Listing Regulations”].

M49 K49

During the period under review, the Company has

complied with the provisions of the Act, Rules, Regulations,

Guidelines, Standards, etc. mentioned above, to the

extent applicable.

We further report that -

The Board of Directors of the Company is duly

constituted with proper balance of Executive Directors,

Non-Executive and Independent Directors. The changes

in the composition of the Board of Directors that took

place during the period under review were carried out in

compliance with the provisions of the Act.

Adequate notice was given to all Directors to schedule the

Board Meetings, agenda and detailed notes on agenda

were sent well in advance for meetings, and a system

exists for seeking and obtaining further information and

clarications on the agenda items before the meeting

and for meaningful participation at the meeting.

During the period under review, decisions were carried

through unanimously and no dissenting views were

observed, while reviewing the minutes.

We further report that there are adequate systems and

processes in the Company commensurate with the size

and operations of the Company to monitor and ensure

compliance with applicable laws, rules, regulations and

guidelines.

We further report that during the audit period, the

Company has undertaken following events / actions:

i. The Board of Directors of the Company at their

meeting held on June 19, 2019 has approved the

matters relating to Share purchase agreement by

and amongst the Company, Housing Development

Finance Corporation Limited (HDFC Limited), Apollo

Munich Health Insurance Company Limited (AMHI),

Apollo Hospitals Enterprise Limited, Apollo Energy

Company Limited, Munich Health Holding AG and

subscribers to the Memorandum of Association

of AMHI in connection with the acquisition of upto

51.2% of issued and paid up share capital of AMHI

by HDFC Limited and subsequent merger of AMHI

with the Company, subject to receipt of regulatory

approvals.

ii. The Board of Directors of the Company at its

meeting held on January 15, 2020, has approved

Scheme of Arrangement and Amalgamation for

merger of HDFC ERGO Health Insurance Limited

(formally known as Apollo Munich Health Insurance

Company Limited) with the Company pursuant to

Sections 230 to 232 of the Companies Act, 2013

and the rules framed thereunder. The Company

Scheme Application has been led by the Company

with the Hon’ble National Company Law Tribunal,

Mumbai Bench on February 17, 2020 for its

approval.

For Bhandari & Associates

Company Secretaries

Sd/-

S. N. Bhandari

Partner

Mumbai FCS No: 761; C P No.: 366

May 8, 2020 ICSI UDIN: F000761B000213930

This report is to be read with our letter of even date

which is annexed as Annexure ‘A’ and forms an integral

part of this report.

50 1 3 t h A n n u a l R e p o r t 2 0 1 9 - 2 0

M50 K50

Annexure ‘A’

To,

The Members,

HDFC ERGO General Insurance Company Limited

CIN: U66030MH2007PLC177117

Our Secretarial Audit Report for the Financial Year ended on March 31, 2020 of even date is to be read along with

this letter.

1. Maintenance of secretarial record is the responsibility of the management of the Company. Our responsibility is

to express an opinion on these secretarial records based on our audit.

2. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about

the correctness of the contents of the Secretarial records. The verication was done on test basis to ensure that

correct facts are reected in Secretarial records. We believe that the processes and practices we follow provide

a reasonable basis for our opinion.

3. We have not veried the correctness and appropriateness of nancial records and Books of Accounts of the

Company.

4. Wherever required, we have obtained the Management representation about the compliance of laws, rules and

regulations and happening of events etc.

5. The compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the

responsibility of management. Our examination was limited to the verication of procedures on test basis.

6. The Secretarial Audit report is neither an assurance as to the future viability of the Company nor of the efcacy

or effectiveness with which the management has conducted the affairs of the Company.

For Bhandari & Associates

Company Secretaries

Sd/-

S. N. Bhandari

Partner

Mumbai FCS No: 761; C P No.: 366

May 8, 2020 ICSI UDIN: F000761B000213930

Independent Auditors’ Report

Independent Auditors’ Report to the Members of HDFC ERGO GENERAL INSURANCE COMPANY LIMITED

Report on the audit of the Standalone Financial

Statements Opinion

We have audited the standalone nancial statements of

HDFC ERGO GENERAL INSURANCE COMPANY LIMITED

(“the Company”), which comprise the Balance Sheet as

at March 31, 2020, the Revenue Accounts, the Prot and

Loss Account and the Receipts and Payments Account

for the year ended March 31, 2020 and summary of the

signicant accounting policies and other explanatory

information.

In our opinion and to the best of our information and

according to the explanations given to us, the aforesaid

standalone financial statements are prepared in

accordance with the requirements of the Insurance

Act, 1938 (the “Insurance Act”), Insurance Regulatory

and Development Act, 1999 (the “IRDA Act”), Insurance

Regulatory and Development Authority (Preparation of

Financial Statements and Auditor’s Report of Insurance

Companies) Regulations, 2002 (the “Financial Statements

Regulations”) including orders/directions/circulars issued

by the Insurance Regulatory and Development Authority of

India (“IRDAI”) and the Companies Act, 2013 (“the Act”) to

the extent applicable and in the manner so required, and

give a true and fair view in conformity with the accounting

principles generally accepted in India, as applicable to

insurance companies:

(a) in the case of the Balance Sheet, of the state of

affairs of the Company as at March 31, 2020;

(b) in the case of the Revenue Accounts, of the operating

prot in so far as it relates to the Miscellaneous

Revenue Account and the operating loss in so far

as it relates to the Fire Revenue Account and the

Marine Revenue Account for the year ended March

31, 2020;

prot for the year ended on March 31, 2020; and

(d) in the case of the Receipts and Payments Account,

of the receipts and payments for the year ended on

March 31, 2020

The Board of Directors of the Company in their meeting

held on May 08, 2020 had approved a set of nancial

statements (previous financial statements) and we

had issued our report thereon including report on

the adequacy of the internal financial controls with

reference to nancial statements of the Company and

the operating effectiveness of such controls dated May

08, 2020 and separate certicate dated May 08, 2020

certifying the matters specied in paragraphs 3 and 4 of

Schedule C to the IRDA Financial Statements Regulations

thereon under our UDIN 20044784AAAAAL7995 and

20048243AAAACC7677 respectively. At that point

of time, the Scheme of Amalgamation (the Scheme)

whereby HDFC ERGO Health Insurance Limited (formerly

Apollo Munich Health Insurance Company Limited) was

getting amalgamated with the Company with effect from

March 01, 2020 was pending for approval from National

Company Law Tribunal, Mumbai Bench (“the NCLT”) and

Insurance Regulatory and Development Authority of India

(“the IRDAI”). The above Scheme has received requisite

approval and has come into force on November 13,

2020. Since the previous nancial statements were not

approved by the shareholders of the Company, the Board

of Directors at their meeting held on November 13, 2020

has made necessary changes to give effect to the Scheme

in the previous nancial statements and has approved the

attached nancial statements. We have been called upon

to issue our Audit Report on such nancial statements,

a report on the effectiveness of internal control with

reference to financial statements and also separate

certicate on matters specied in paragraphs 3 and 4 of

Schedule C to the IRDA Financial Statements Regulations.

Basis for opinion

We conducted our audit in accordance with the Standards

on Auditing (the “SAs”) specied under section 143(10)

of the Companies Act, 2013. Our responsibilities under

those Standards are further described in the Auditor’s

Responsibilities for the Audit of the Financial Statements

section of our report. We are independent of the Company

in accordance with the Code of Ethics issued by the

52 13th Annual Report 2019-20

Independent Auditors’ Report (Continued)

Institute of Chartered Accountants of India together with

the ethical requirements that are relevant to our audit of

the nancial statements under the Insurance Act, the IRDA

Act, the Regulations, the Act and the Rules thereunder,

and we have fullled our other ethical responsibilities

in accordance with these requirements and the Code

of Ethics. We believe that the audit evidence we have

obtained is sufcient and appropriate to provide a basis

for our opinion.

Emphasis of Matter

We draw your attention to the note no. 37 to the

standalone nancial statements in connection with the

management’s assessment of the impact of the outbreak

of Coronavirus (Covid-19) and lock-down announced by

the Central Government on the business operations of

the Company. The management assessment includes

but is not limited to valuation of investments, valuation

of policy-related liabilities and solvency position of the

Company. The management continues to closely monitor

the implications of Covid-19 on its operations and nancial

statements. Our opinion is not modied in respect of this

matter.

Key Audit Matters

Key audit matters are those matters that, in our

professional judgement, were of most signicance in our

audit of the nancial statements of the current period.

These matters were addressed in the context of our audit

of the nancial statements as a whole, and in forming our

opinion thereon, and we do not provide a separate opinion

on these matters.

Key Audit Matter Description:- How the scope of our audit responded the key audit matter: -

1) Valuation of Investments:

• The carrying value of Investments amounting to

` 135,768,828 (‘000) (Policy holders and Shareholders)

represent 79.58% of total assets as disclosed in the

nancial statement.

• Due to the regulatory prescriptions applicable to

recognition, measurement and disclosure of Investments

and the assumptions used in the valuation of Investments,

(Note 10 to these nancial statements) we considered this

as a key audit matter.

• The valuation of all investments should be as per the

investment policy framed by the Company which in turn

should be in line with IRDAI Investment Regulations.

• The Company has inter alia a policy framework for Valuation

and impairment of Investments

• The valuation of unquoted investments and thinly traded

investments continues to be an area of inherent risk

because of market volatility, unavailability of reliable prices

and macroeconomic uncertainty.

• The company performs an impairment review of its

investments periodically and recognizes impairment charge

when the investments meet the trigger/s for impairment

provision as per the criteria set out in the investment policy

of the Company. Further, the assessment of impairment

involves signicant management judgement.

• To ensure that the impairment provision considered in

the nancial statements is adequate, we performed the

following procedures:

• Tested the management oversight and controls over

valuation of investments.

• Independently test-checked valuation of unquoted

investments, on a sample basis,

• Reviewed and assessed the adequacy with respect to

management assessment of impairment charge on

investments outstanding at the year end. Reviewed the

Fair Value Change Account for specic investments.

• Reviewed the basis of provisions accounted in respect

of non-performing investments and ensured that the

provision meets the IRDAI guidelines

• Reviewed the compliance with the IRDAI guidelines on

recording of Income on non performing investments

• Accordingly based on our audit procedures, we noted

no reportable matters regarding investments and its

valuation.

Independent Auditors’ Report (Continued)

2) Provision for bad & doubtful debts relating to receivables from other insurance companies (Including Government

Receivables), outstanding premium and agent balances:

• “Dues from Other entities carrying on insurance business”

is ` 1,416,200 (‘000) as at the year end. During the year the

Company has written off ` 13,607(‘000) net of reversals

of ` 30,108 (‘000) of earlier years, being amounts due

from other insurance companies. These amounts have

been accounted under Prot and Loss Account.

• “Outstanding premium” amounting to ` 14,497,129

(‘000) (schedule 12) includes premium due from Central

Government, State Government and others. This amount

includes outstanding premium accounted in accordance

with IRDAI Circular No. IRDAI/NL/CIR/MOT/079/04/2020

dated April 2, 2020 (further claried by IRDAI circular No.

IRDAI/NL/CIR/MOT/081/04/2020 dated April 3, 2020) on

the Motor third party liability of ` 421,257 (‘000) [Refer

Note 37 (b) of nancial statements]

• Outstanding “Agent balances” as at the year end amounted

to ` 6,229 (‘000).

• Due to the signicance of the amount and judgement

involved in assessing the recoverability of dues, this has

been considered as key audit matter.

• We reviewed the historical provision for bad debts and

compared it to the actual amounts written off, to determine

whether management’s estimates have been prudent and

reasonable.

• Our audit procedure included the following:

• Evaluation and testing of controls over the recording,

monitoring and ageing of outstanding premium, dues from

other insurance companies.

• Evaluating the adequacy of the process of reconciliation

followed by the Company with respect to amounts due from

other insurance Companies.

• Sending out direct conrmations of balances to select

parties on a test check basis as required under “SA

505-External Conrmations”.

• We discussed with management and reviewed

correspondences, where relevant, to identify disputes, if

any, on any of the recoverable balances and review the

assessment of the management as to the requirement of

provisioning, if any on these disputed dues.

• Reviewed the accounting entries recorded for policy holders

whose motor vehicle third party insurance policies fall due

for renewal during the period on and from the March 25,

2020 upto March 31, 2020 to ensure that the premium

has been considered for motor vehicle third party insurance

policies as per the IRDAI guidance.

• Accordingly, based on our audit procedures, we noted no

reportable matter.

Provisions and contingent liabilities:

• As of March 31, 2020, the Company has disclosed pending

litigations arising out of matters relating to Service Tax

contingent liabilities of ` 270,442 (‘000) and Claims, other

than those under policies, not acknowledged as debts as

` 1,682 (‘000) (Refer Note No. 4 of the nancial statement).

In addition the Company has pending litigations arising out

of matters relating to Service Tax ` 1,742,305 (‘000)

• The assessment of the existence of the present legal

obligation, analysis of the probability of the related payment

and analysis of a reliable estimate, requires management’s

judgement to ensure appropriate accounting or disclosures.

• Due to the level of judgement relating to recognition,

valuation and presentation of provisions and contingent

liabilities, this is considered to be a key audit matter.

•

As part of our audit procedures, we have assessed

management’s processes to identify new possible obligations

and changes in existing obligations for compliance with

the requirements of Accounting Standard 29 – Provisions,

Contingent Liabilities and Contingent Assets.

• The audit procedures performed by us included the following:

•

Obtained listing from the management of the changes in

litigation status as compared to prior year and obtained a

detailed understanding of the disputes and also reviewed the

analysis made by the management and assumptions used

by them on how they concluded as required under AS 29

• Wherever the company had obtained external legal advice,

the same were reviewed to gain an understanding of the

management’s view on the matters.

• Used internal tax experts to gain an understanding of these

disputes and also obtained their views on the possible

outcome based on facts and current circumstances

• Obtained legal representation letters on the material

outstanding legal cases.

• Reviewed minutes of board meetings, including the sub-

committees.

• Based on the audit evidence obtained, while noting the inherent

uncertainty with such legal, regulatory and tax matters,

we determined the level of provisioning and disclosure of

contingent liabilities as at March 31, 2020 to be appropriate.

54 13th Annual Report 2019-20

Independent Auditors’ Report (Continued)

4) Scheme of Amalgamation:

• During the year, a Scheme of Amalgamation was approved

between the company and its fellow subsidiary Company,

HDFC ERGO Health Insurance Limited (formerly Apollo

Munich Health Insurance Company Limited) whereby,

the Company has proposed to merge HDFC ERGO Health

Insurance Limited with Company from the Appointed Date

i.e. March 1, 2020. Accounting treatment is provided by

the management for transferring of assets and liabilities of

HDFC ERGO Health Insurance Limited to the Company and

accordingly the impact is given in the nancial statement for

year ended on March 31, 2020. Thus, it is considered to be

a key audit matter, as this is a signicant event during the

year, involving specic accounting treatment, in compliance

with the Scheme and applicable Accounting Standards.

• Our audit procedures include obtaining an understanding

of the transaction. We have read the approved Scheme of

Amalgamation and identied pertinent terms relevant to the

accounting for the transaction. We assessed the Company’s

conclusion on amalgamation accounting of the transaction

under “The Pooling of Interests Method” in accordance with

paragraph 10 of Accounting Standard 14: Accounting for

Amalgamations.

• This conclusion included the transfer of assets and liabilities

at book values to the Company and impact in reserves and

surplus for difference between the consideration paid and

book value of net assets transferred to the Company.

• In determining accuracy and completeness of the treatment

of the amalgamation we tested the following: the arithmetic

accuracy of management’s calculations for giving effect of

the scheme in standalone nancial statements, the impact

of uniformity of accounting policies of Transferor Company

with those of the Transferee Company, the adjustment given

in the reserves and surplus for net assets transferred to

the Company, elimination of inter-company transactions

between both the entities.

Other Matter

The actuarial valuation of the outstanding claims Incurred

but Not Reported (IBNR) and Premium Deciency Reserve

(the “PDR”) that are estimated using statistical methods,

PDR and IBNR reserve, as at March 31, 2020 have been

duly certied by the Appointed Actuary and in his opinion,

the norms and assumptions for such Valuation are in

accordance with the guidelines issued by the Insurance

Regulatory and Development Authority of India (“IRDAI”/

“Authority”) and the Institute of Actuaries of India in

concurrence with the Authority. We have relied upon the

Appointed Actuary’s certicate in this regard for forming

our opinion on the valuation of liabilities for outstanding

claims reserves and PDR contained in the standalone

nancial statements of the Company.

Information other than the Financial Statement and

Auditor’s Report thereon

The Company’s Board of Directors is responsible for the

other information. The other information comprises the

information included in the “the Management Report”

and “Director’s Report”, but does not include the nancial

statements and our auditor’s report thereon.

Our opinion on the nancial statements does not cover

the other information and we do not express any form of

assurance conclusion thereon.

In connection with our audit of the nancial statements,

our responsibility is to read the other information and,

in doing so, consider whether the other information is

materially inconsistent with the financial statements

or our knowledge obtained in the audit or otherwise

appears to be materially misstated. If, based on the work

we have performed, we conclude that there is a material

misstatement of this other information, we are required

to report that fact.

We have nothing to report in this regard.

Responsibilities of Management for the Standalone

Financial Statements

The Company’s Board of Directors is responsible for the

matters stated in Section 134(5) of the Companies Act,

2013 with respect to the preparation of these standalone

nancial statements that give a true and fair view of the

nancial position, nancial performance, and receipts

and payments of the Company in accordance with the

requirements of the Insurance Act 1938, as amended

Independent Auditors’ Report (Continued)

by Insurance Laws (Amendment) Act, 2015 read with

the IRDA Act, the Regulations, order/ directions issued

by the IRDAI in this regard and in accordance with the

accounting principles generally accepted in India including

the Accounting Standards specied under Section 133

of the Act [read with Rule 7 of the Companies (Accounts)

Rules, 2014] to the extent applicable and in the manner

so required. This responsibility also includes maintenance

of adequate accounting records in accordance with the

provisions of the Act for safeguarding of the assets of the

Company and for preventing and detecting frauds and other

irregularities; selection and application of appropriate

implementation and maintenance of accounting

policies; making judgements and estimates that are

reasonable and prudent; and design, implementation and

maintenance of adequate internal nancial controls, that

were operating effectively for ensuring the accuracy and

completeness of the accounting records, relevant to the

preparation and presentation of the nancial statement

that give a true and fair view and are free from material

misstatement, whether due to fraud or error.

In preparing the financial statements, management

is responsible for assessing the Company’s ability to

continue as a going concern, disclosing, as applicable,

matters related to going concern and using the going

concern basis of accounting unless management either

intends to liquidate the Company or to cease operations,

or has no realistic alternative but to do so. Those Board

of Directors are also responsible for overseeing the

Company’s nancial reporting process.

Auditor’s responsibilities for the audit of the Standalone

Financial Statements

Our objectives are to obtain reasonable assurance about

whether the nancial statements as a whole are free from

material misstatement, whether due to fraud or error, and

to issue an auditor’s report that includes our opinion.

Reasonable assurance is a high level of assurance, but

is not a guarantee that an audit conducted in accordance

with the SAs will always detect a material misstatement

when it exists. Misstatements can arise from fraud or

error and are considered material if, individually or in the

aggregate, they could reasonably be expected to inuence

the economic decisions of users taken on the basis of

these nancial statements.

As part of an audit in accordance with the SAs, we exercise

professional judgement and maintain professional

scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement

of the nancial statements, whether due to fraud

or error, design and perform audit procedures

responsive to those risks, and obtain audit evidence

that is sufficient and appropriate to provide a

basis for our opinion. The risk of not detecting

a material misstatement resulting from fraud is

higher than for one resulting from error, as fraud

may involve collusion, forgery, intentional omissions,

misrepresentations, or the override of internal

control.

• Obtain an understanding of internal control relevant

to the audit in order to design audit procedures that

are appropriate in the circumstances.

• Evaluate the appropriateness of accounting policies

used and the reasonableness of accounting

estimates and related disclosures made by

management.

• Conclude on the appropriateness of management’s

use of the going concern basis of accounting and,

based on the audit evidence obtained, whether

a material uncertainty exists related to events or

conditions that may cast signicant doubt on the

Company’s ability to continue as a going concern. If

we conclude that a material uncertainty exists, we

are required to draw attention in our auditor’s report

to the related disclosures in the nancial statements

or, if such disclosures are inadequate, to modify our

opinion. Our conclusions are based on the audit

evidence obtained up to the date of our auditor’s

report. However, future events or conditions may

cause the Company to cease to continue as a going

concern.

• Evaluate the overall presentation, structure and

content of the nancial statements, including the

56 13th Annual Report 2019-20

Independent Auditors’ Report (Continued)

disclosures, and whether the nancial statements

represent the underlying transactions and events in

a manner that achieves fair presentation.

Materiality is the magnitude of the misstatement in

the standalone nancial statements that, individually

or in aggregate, makes it probable that the economic

decisions of a reasonably knowledgeable user of the

standalone nancial statements may be inuenced. We

consider quantitative materiality and qualitative factors

in (i) planning the scope of our audit work and evaluating

the results of our work; and (ii) to evaluate the effects of

any identied misstatements in the standalone nancial

statements.

We communicate with those charged with governance

regarding, among other matters, the planned scope and

timing of the audit and signicant audit ndings, including

any signicant deciencies in internal control that we

identify during our audit.

We also provide those charged with governance with

a statement that we have complied with relevant

ethical requirements regarding independence, and to

communicate with them all relationships and other

matters that may reasonably be thought to bear on our

independence, and where applicable, related safeguards.

From the matters communicated with those charged with

governance, we determine those matters that were of

most signicance in the audit of the nancial statements

of the current period and are therefore the key audit

matters. We describe these matters in our auditor’s report

unless law or regulation precludes public disclosure about

the matter or when, in extremely rare circumstances, we

determine that a matter should not be communicated in

our report because the adverse consequences of doing

so would reasonably be expected to outweigh the public

interest benets of such communication.

Report on other legal and regulatory requirements

1. As required by IRDA Financial Statements

Regulations, we have issued a separate certicate

dated May 08, 2020 certifying the matters specied

in paragraphs 3 and 4 of Schedule C to the IRDA

Financial Statements Regulations.

2. Further, to our comments in the Certicate referred

to in paragraph 1 above, as required under the

Regulations, read with Section 143 (3) of the Act,

we report that:

a) We have sought and obtained all the information

and explanations which to the best of our

knowledge and belief were necessary for the

purposes of our audit.

b) In our opinion and to the best of our information

and according to the explanations given to us,

proper books of account as required by law

have been kept by the Company so far as it

appears from our examination of those books.

c) As the Company’s nancial accounting system

is centralized at Head Ofce, no returns for

the purposes of our audit are prepared at the

branches and other ofces of the Company.

d) The Balance Sheet, the Revenue Account, the

Prot and Loss Account, and the Receipts and

Payments Account dealt with by this Report are

in agreement with the books of account;

e) In our opinion and to the best of our information

and according to the explanations given to us,

investments have been valued in accordance

with the provisions of the Insurance Act and

the Regulations and orders/directions issued

by the IRDAI in this behalf;

f) In our opinion and to the best of our information

and according to the explanations given to us,

the remuneration paid by the Company to its

directors during the year is in accordance with

the provisions of section 197 of the Act and

section 34 of the IRDAI Act.

g) In our opinion and to the best of our information

and according to the explanations given

to us, the accounting policies selected by

the Company are appropriate and are in

compliance with the Accounting Standards

referred to in Section 133 of the Act, read with

Rule 7 of the Companies (Accounts) Rules,

2014, to the extent they are not inconsistent

with the accounting principles prescribed in

the Regulations and orders/directions issued

by the IRDAI in this behalf;

h) In our opinion and to the best of our information

and according to the explanations given to us,

the Balance Sheet, the Revenue Account, the

Prot and Loss Account and the Receipts and

Payments Account dealt with by this report

comply with the Accounting Standards referred

to in Section 133 of the Act, read with Rule

7 of the Companies (Accounts) Rules, 2014

to the extent they are not inconsistent with

the accounting principles prescribed in the

Regulations and orders/directions issued by

IRDAI in this regard; and

i) On the basis of the written representations

received from the directors as on March

31, 2020, taken on record by the Board of

Directors, none of the directors is disqualied

as on March 31, 2020, from being appointed

as a director in terms of Section 164 (2) of the

Act.

j) With respect to the adequacy of the internal

nancial controls with reference to nancial

statements of the Company and the operating

effectiveness of such controls, refer to our

separate report in “Annexure A”.

k) With respect to the other matters to be

included in the Auditor’s Report in accordance

with Rule 11 of the Companies (Audit and

Auditors) Rules, 2014, in our opinion and to

the best of our information and according to

the explanations given to us:

i. The Company has disclosed the impact

of pending litigations on its financial

position in its financial statements –

Refer Note 4 to the nancial statements;

ii. The Company has made provision, as

required under the applicable law or

accounting standards, for material

foreseeable losses, if any, on long-term

contracts including derivative contracts.

iii. There has been no delay in transferring

amounts, required to be transferred, to

the Investor Education and Protection

Fund by the Company.

For B. K. KHARE & CO.

Chartered Accountants

Firm’s Registration No.: 105102W

Padmini Khare Kaicker

Partner

Membership No.: 044784

UDIN No.: 20044784AAAADQ4753

For G. M. KAPADIA & CO.

Chartered Accountants

Firm’s Registration No.: 104767W

Rajen Ashar

Partner

Membership No. 048243

UDIN No.: 20048243AAAAKI4474

Mumbai,

November 13, 2020

Independent Auditors’ Report (Continued)

58 13th Annual Report 2019-20

Annexure A to Independent Auditors’ Report

Referred to in paragraph 2(j) of the Independent Auditors’ Report of even date to the members of HDFC ERGO General

Insurance Company Limited on the standalone nancial statements for the year ended March 31, 2020.

Report on the Internal Financial Controls with reference

to nancial statements under Clause (i) of Sub-section

3 of Section 143 of the Act

1. We have audited the internal nancial controls with

reference to nancial statements of HDFC ERGO

GENERAL INSURANCE COMPANY LIMITED (“the

Company”) as of March 31, 2020 in conjunction with

our audit of the standalone nancial statements of

the Company for the year ended on that date.

Management’s Responsibility for Internal Financial

Controls

2. The Company’s management is responsible for

establishing and maintaining internal financial

controls based on the internal control over nancial

reporting criteria established by the Company

considering the essential components of internal

control stated in the Guidance Note on Audit of

Internal Financial Controls Over Financial Reporting

issued by the Institute of Chartered Accountants

of India (ICAI). These responsibilities include

the design, implementation and maintenance

of adequate internal nancial controls that were

operating effectively for ensuring the orderly

and efficient conduct of its business, including

adherence to company’s policies, the safeguarding

of its assets, the prevention and detection of frauds

and errors, the accuracy and completeness of the

accounting records, and the timely preparation of

reliable nancial information, as required under the

Act.

Auditors’ Responsibility

3. Our responsibility is to express an opinion on

the Company’s internal financial with reference

to nancial statements based on our audit. We

conducted our audit in accordance with the

Guidance Note on Audit of Internal Financial

Controls Over Financial Reporting (the “Guidance

Note”) and the Standards on Auditing, deemed to

be prescribed under section 143(10) of the Act,

to the extent applicable to an audit of internal

nancial controls, both applicable to an audit of

internal nancial controls and both issued by the

ICAI. Those Standards and the Guidance Note

require that we comply with ethical requirements

and plan and perform the audit to obtain reasonable

assurance about whether adequate internal nancial

controls with reference to nancial statements was

established and maintained and if such controls

operated effectively in all material respects.

4. Our audit involves performing procedures to obtain

audit evidence about the adequacy of the internal

nancial controls system with reference to nancial

statements and their operating effectiveness. Our

audit of internal nancial controls with reference

to financial statements included obtaining an

understanding of internal nancial controls with

reference to nancial statements, assessing the

risk that a material weakness exists, and testing and

evaluating the design and operating effectiveness

of internal control based on the assessed risk.

The procedures selected depend on the auditor’s

judgement, including the assessment of the risks of

material misstatement of the standalone nancial

statements, whether due to fraud or error.

5. We believe that the audit evidence we have obtained

is sufficient and appropriate to provide a basis

for our audit opinion on the Company’s internal

nancial controls system with reference to nancial

statements.

Meaning of Internal Financial Controls with reference to

nancial statements

6. A company’s internal nancial control with reference

to financial statements is a process designed

to provide reasonable assurance regarding the

reliability of nancial reporting and the preparation

of standalone financial statements for external

purposes in accordance with generally accepted

accounting principles. A company’s internal nancial

control with reference to financial statements

includes those policies and procedures that (1)

pertain to the maintenance of records that, in

Annexure “A” to the Independent Auditors’ Report (Continued)

reasonable detail, accurately and fairly reect the

transactions and dispositions of the assets of the

company; (2) provide reasonable assurance that

transactions are recorded as necessary to permit

preparation of standalone nancial statements in

accordance with generally accepted accounting

principles, and that receipts and expenditures of

the company are being made only in accordance

with authorizations of management and directors

of the company; and (3) provide reasonable

assurance regarding prevention or timely detection

of unauthorized acquisition, use, or disposition of the

company’s assets that could have a material effect

on the standalone nancial statements.

Inherent Limitations of Internal Financial Controls with

reference to nancial statements

7. Because of the inherent limitations of internal

financial controls with reference to financial

statements, including the possibility of collusion or

improper management override of controls, material

misstatements due to error or fraud may occur and

not be detected. Also, projections of any evaluation

of the internal nancial controls with reference to

nancial statements to future periods are subject

to the risk that the internal nancial control with

reference to financial statements may become

inadequate because of changes in conditions, or

that the degree of compliance with the policies or

procedures may deteriorate.

Opinion

8. In our opinion, the Company has, in all material

respects, an adequate internal nancial controls

system with reference to nancial statements and

such internal nancial controls with reference to

nancial statements were operating effectively as

at March, 31, 2020, based on the internal control

over nancial reporting criteria established by the

Company considering the essential components

of internal control stated in the Guidance Note on

Audit of Internal Financial Controls Over Financial

Reporting issued by the Institute of Chartered

Accountants of India.

Other Matters

The actuarial valuation of the outstanding claims Incurred

but Not Reported (IBNR) and Premium Deciency Reserve

(the “PDR”) that are estimated using statistical methods,

PDR and IBNR reserve, as at March 31, 2020 have been

duly certied by the Appointed Actuary and in his opinion,

the norms and assumptions for such Valuation are in

accordance with the guidelines issued by the Insurance

Regulatory and Development Authority of India (“IRDAI”/

“Authority”) and the Institute of Actuaries of India in

concurrence with the Authority. We have relied upon the

Appointed Actuary’s certicate in this regard for forming

our opinion on the valuation of liabilities for outstanding

claims reserves and PDR contained in the standalone

nancial statements of the Company.

For B. K. KHARE & CO.

Chartered Accountants

Firm’s Registration No.: 105102W

Padmini Khare Kaicker

Partner

Membership No.: 044784

UDIN No.: 20044784AAAADQ4753

For G. M. KAPADIA & CO.

Chartered Accountants

Firm’s Registration No.: 104767W

Rajen Ashar

Partner

Membership No. 048243

UDIN No.: 20048243AAAAKI4474

Mumbai,

November 13, 2020

60 13th Annual Report 2019-20

Independent Auditors’ Certicate

TO THE MEMBERS OF HDFC ERGO GENERAL INSURANCE COMPANY LIMITED

(Referred to in paragraph 1 of our Report on Other Legal and Regulatory Requirements forming part of the Independent

Auditors’ Report dated November 13, 2020)

1. This certicate is issued to comply with the provisions of paragraph 3 and 4 of Schedule C of the Insurance

Regulatory and Development Authority (Preparation of Financial Statements and Auditor’s Report of Insurance

Companies) Regulations 2002, (“the IRDA Financial Statements Regulations”) read with Regulation 3 of the IRDA

Financial Statements Regulations.

Management’s Responsibility

2. The Company’s Management is responsible for complying with the provisions of the Insurance Act, 1938 as

amended by the Insurance Laws (Amendment) Act, 2015 (the “Insurance Act”), the Insurance Regulatory and

Development Authority Act, 1999 (the “IRDA Act”), the IRDA Financial Statements Regulations, orders/directions

issued by the Insurance Regulatory and Development Authority of India (the “IRDAI”) which includes the preparation

of the Management Report. This responsibility includes collecting, collating and validating data and designing,

implementing and monitoring of internal controls suitable for ensuring the aforesaid and applying an appropriate

basis of preparation and making estimates and judgments that are reasonable in the circumstances.

Independent Auditor’s Responsibility

3. Our responsibility for the purpose of this certicate, is to provide reasonable assurance on the matters contained

in paragraphs 3 and 4 of Schedule C of the IRDA Financial Statements Regulation read with Regulation 3 of the

IRDA Financial Statements Regulations.

4. We conducted our examination in accordance with the Guidance Note on Reports or Certicates for Special

Purposes (Revised 2016) and Standards on Auditing issued by the Institute of Chartered Accountants of India

(ICAI) in so far as applicable for the purpose of this Certicate. This Guidance Note requires that we comply with

the ethical requirements of the Code of Ethics issued by the ICAI. We have complied with the relevant applicable

requirements of the Standard on Quality Control (SQC) 1, “Quality Control for Firms that Perform Audits and

Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements”.

Opinion

5. In accordance with the information and explanations and representations given to us and to the best of our

knowledge and belief and based on our examination, of the books of account and other records maintained by

the Company for the year ended March 31, 2020, we certify that:

a) We have reviewed the Management Report attached to the nancial statements for the year ended March

31, 2020, and on the basis of our review, there is no apparent mistake or material inconsistencies with the

nancial statements;

b) Based on the Management representations and compliance certicates submitted to the Board of Directors

by the ofcers of the Company charged with compliance and the same being noted by the Board, we certify

that the Company has complied with the terms and conditions of registration stipulated by the IRDAI;

c) We have veried the cash balances and securities relating to the Company’s loans and investments as

at March 31, 2020, on the basis of certicates/conrmations received from the concerned branches, HO

personnel of the Company, Custodian and / or Depository Participants appointed by the Company, as the

case may be.

d) The Company is not a trustee of any trust; and

e) No part of the assets of the Policyholders’ Funds has been directly or indirectly applied in contravention to

the provisions of the Insurance Act, relating to the application and investments of the Policyholders’ Funds.

Restriction on Use

6. This certicate is issued at the request of the Company solely for use of the Company for inclusion in the annual

accounts in order to comply with the provisions of paragraph 3 and 4 of Schedule C of the IRDA Financial Statements

Regulations read with Regulation 3 of the IRDA Financial Statements Regulations and is not intended to be and

should not be used for any other purpose without our prior consent. Accordingly, we do not accept or assume any

liability or any duty of care for any other purpose or to any other person to whom this Certicate is shown or into

whose hands it may come without our prior consent in writing.

For

B. K. KHARE & CO.

Chartered Accountants

Firm’s Registration No.: 105102W

Padmini Khare Kaicker

Partner

Membership No.: 044784

UDIN No.: 20044784AAAADQ4753

Mumbai,

November 13, 2020

For G. M. KAPADIA & CO.

Chartered Accountants

Firm’s Registration No.: 104767W

Rajen Ashar

Partner

Membership No. 048243

UDIN No.: 20048243AAAAKI4474

62 13th Annual Report 2019-20

Balance Sheet as at March 31, 2020

FORM B - BS

IRDAI Registration No: 146

Date of Registration with the IRDAI: July 09, 2010

Particulars Schedule As at

March 31, 2020

( ` ’000)

As at

March 31, 2019

( ` ’000)

SOURCES OF FUNDS

SHARE CAPITAL 5 6,058,421 6,054,221

SHARE CAPITAL SUSPENSE 1,053,689 —

(Refer Note 3A of Schedule 16)

RESERVES AND SURPLUS 6 21,319,914 13,769,664

FAIR VALUE CHANGE ACCOUNT -SHAREHOLDERS (110,020) (57,263)

FAIR VALUE CHANGE ACCOUNT -POLICYHOLDERS (645,147) (217,528)

BORROWINGS 7 5,040,000 3,500,000

DEFERRED TAX LIABILITY

— —

TOTAL

32,716,857 23,049,094

APPLICATION OF FUNDS

INVESTMENTS - SHAREHOLDERS 8 19,780,184 18,971,760

INVESTMENTS - POLICYHOLDERS 8A 115,988,644 72,068,296

LOANS 9 — —

FIXED ASSETS 10 2,824,353 2,135,050

DEFERRED TAX ASSET 726,276 517,639

(Refer Note 15 of Schedule 16)

CURRENT ASSETS

Cash and Bank Balances 11 7,821,307 3,731,865

Advances and Other Assets 12

23,462,687 17,864,854

Sub-Total (A) 31,283,994 21,596,719

CURRENT LIABILITIES 13 95,494,980 63,751,549

PROVISIONS 14

42,391,614 28,488,821

Sub-Total (B) 137,886,594 92,240,370

NET CURRENT ASSETS/(LIABILITIES) (C) = (A-B) (106,602,600) (70,643,651)

MISCELLANEOUS EXPENDITURE 15 — —

(to the extent not written off or adjusted)

DEBIT BALANCE IN PROFIT AND LOSS ACCOUNT

— —

TOTAL

32,716,857 23,049,094

NOTES TO ACCOUNTS 16

Schedules referred to above and the notes to accounts form an integral part of the Balance Sheet

Signatures to the Balance Sheet and Schedules 1 to 16

In terms of our report attached For and on behalf of the Board of Directors

B. K. Khare & Co.

Chartered Accountants

Firm Registration No.: 105102W

Padmini Khare Kaicker

Partner

Membership No.: 044784

Mumbai,

Dated: November 13, 2020

G. M. Kapadia & Co.

Chartered Accountants

Firm Registration No.: 104767W

Rajen Ashar

Partner

Membership No.: 048243

Keki M. Mistry

Director

(DIN: 00008886)

Samir H. Shah

Executive Director & CFO

(DIN: 08114828)

Ritesh Kumar

Managing Director & CEO

(DIN: 02213019)

Anuj Tyagi

Executive Director &

Chief Business Ofcer

(DIN: 07505313)

Dayananda V. Shetty

Company Secretary and

Chief Compliance Ofcer

(Membership No: FCS 4638)

Prot and Loss Account for the year ended March 31, 2020

FORM B - PL

IRDAI Registration No: 146

Date of Registration with the IRDAI: July 09, 2010

Particulars Schedule For the year ended

March 31, 2020

(` ’000)

For the year ended

March 31, 2019

(` ’000)

OPERATING PROFIT/(LOSS)

Fire Insurance (508,217) 333,361

Marine Insurance (190,496) (230,527)

Miscellaneous Insurance

4,667,652 4,836,224

3,968,939 4,939,058

INCOME FROM INVESTMENTS

Interest, Dividend and Rent – Gross (Refer Note 38 of Schedule 16) 1,339,648 1,379,320

Prot on sale of investments 123,953 158,642

Less: Loss on sale of investments

— —

1,463,601 1,537,962

OTHER INCOME

Others (Refer Note 34 of Schedule 16)

— 175,000

TOTAL (A)

5,432,540 6,652,020

PROVISIONS (OTHER THAN TAXATION)

For diminution in the value of investments (Refer Note 10 of Schedule 16) 116,600 1,578,181

For doubtful debts

(27,608) 7,038

88,992 1,585,219

OTHER EXPENSES

Expenses other than those related to insurance business

Employees’ related remuneration and welfare benets (Refer Note 11 of Schedule 16) 91,467 83,351

Corporate Social Responsibility Expenses (Refer Note 29 of Schedule 16) 74,969 40,901

Bad debts written off 43,715 —

Remuneration to directors and others 4,000 3,752

Bad & Doubtful Investments written off (Refer Note 10 of Schedule 16) 100,000 —

Amalgamation Expenses 161,443 —

Interest on Debentures 278,305 266,000

Penalty (Refer Note 32 of Schedule 16)

— 500

TOTAL (B)

842,891 1,979,723

PROFIT/(LOSS) BEFORE TAX 4,589,649 4,672,297

Provision for Taxation

- Current Tax 1,094,782 1,396,384

- Deferred Tax (Refer Note 15 of Schedule 16) (58,832) (553,964)

MAT Credit Written Off (Refer Note 15 of Schedule 16)

284,281 —

PROFIT/(LOSS) AFTER TAX

3,269,418 3,829,877

APPROPRIATIONS

Interim Dividends paid during the year (Refer Note 36 of Schedule 16) — 1,362,200

Proposed nal Dividend — —

Dividend Distribution tax (Refer Note 36 of Schedule 16) — 280,004

Transfer to any Reserves or Other Accounts — —

Transfer to Debenture Redemption Reserve (Refer Note 33 of Schedule 16) 24,300 97,200

Transfer to Contingency Reserve for Unexpired Risks — —

Balance of Prot/(Loss) brought forward from previous year

5,074,847 2,984,374

BALANCE CARRIED FORWARD TO BALANCE SHEET

8,319,965 5,074,847

EARNINGS PER SHARE (Basic) (in `)

5.32 6.33

EARNINGS PER SHARE (Diluted) (in `)

5.30 6.31

(Face Value ` 10 per share) (Refer Note 25 of Schedule 16)

NOTES TO ACCOUNTS 16

Schedules referred to above and the notes to accounts form an integral part of the Prot and Loss Account

Signatures to the Prot and Loss Account and Schedules 1 to 16

In terms of our report attached For and on behalf of the Board of Directors

B. K. Khare & Co.

Chartered Accountants

Firm Registration No.: 105102W

Padmini Khare Kaicker

Partner

Membership No.: 044784

Mumbai,

Dated: November 13, 2020

G. M. Kapadia & Co.

Chartered Accountants

Firm Registration No.: 104767W

Rajen Ashar

Partner

Membership No.: 048243

Keki M. Mistry

Director

(DIN: 00008886)

Samir H. Shah

Executive Director & CFO

(DIN: 08114828)

Ritesh Kumar

Managing Director & CEO

(DIN: 02213019)

Anuj Tyagi

Executive Director &

Chief Business Ofcer

(DIN: 07505313)

Dayananda V. Shetty

Company Secretary and

Chief Compliance Ofcer

(Membership No: FCS 4638)

64 13th Annual Report 2019-20

Receipts and Payments Account for the year ended March 31, 2020

IRDAI Registration No: 146

Date of Registration with the IRDAI: July 09, 2010

Particulars Schedule For the year ended

March 31, 2020

(` ’000)

For the year ended

March 31, 2019

(` ’000)

Cash ows from operating activities

Premium received from policyholders, including advance receipts 115,667,641 98,660,011

Payments to re-insurers, net of commission and claims (13,100,046) (13,630,289)

Payments to co-insurers, net of claims recovery 199,385 (119,448)

Payments of claims (45,893,023) (52,233,363)

Payments of commission and brokerage (8,837,357) (7,223,621)

Payments of other operating expenses (18,504,027) (12,772,397)

Corporate Social Responsibility (CSR) expenses (74,969) (40,901)

Deposits, advances and staff loans (210,729) 86,013

Income taxes paid (Net) (1,176,873) (1,419,294)

GST paid

(6,567,132) (4,602,949)

Net cash ow from operating activities (A)

21,502,870 6,703,762

Cash ows from investing activities

Purchase of xed assets (696,559) (385,842)

Proceeds from sale of xed assets 10,881 8,287

Purchase of investments (79,403,228) (49,557,374)

Sale of investments 58,505,222 36,530,173

Rent/Interest/Dividend received 7,823,847 5,981,606

Investments in money market instruments and in liquid mutual funds (Net)

(3,809,069) 2,173,603

Net cash used in investing activities (B)

(17,568,906) (5,249,547)

Cash ows from nancing activities

Proceeds from issuance of share capital and share premium 41,465 25,094

Proceeds from borrowing — —

Repayments of borrowing — —

Interest Paid (268,980) (266,000)

Dividend paid (Including dividend distribution tax)

— (1,642,204)

Net cash ow from nancing activities (C)

(227,515) (1,883,110)

Effect of foreign exchange rates on cash and cash equivalents (Net) (D)

234 —

Net increase in cash and cash equivalents (A + B + C + D)

3,706,683 (428,895)

Cash and cash equivalents at the beginning of the year 3,661,455 4,090,350

Cash and cash equivalents on Merger 395,926 —

Cash and cash equivalents at the end of the year

7,764,064 3,661,455

Net increase in cash and cash equivalents

3,706,683 (428,895)

Reconciliation of Cash and cash equivalents with the Balance Sheet:

Cash and Bank balances 7,821,308 3,731,865

Less: Deposit Accounts not considered as Cash and cash equivalents as dened

in AS-3 “Cash Flow Statements”

(57,244) (70,410)

Cash and cash equivalents at the end of the year

7,764,064 3,661,455

NOTES TO ACCOUNTS 16

Refer Schedule 11 for components of cash and bank balances

Signatures to the Receipts and payments Account and Schedules 1 to 16

In terms of our report attached For and on behalf of the Board of Directors

B. K. Khare & Co.

Chartered Accountants

Firm Registration No.: 105102W

Padmini Khare Kaicker

Partner

Membership No.: 044784

Mumbai,

Dated: November 13, 2020

G. M. Kapadia & Co.

Chartered Accountants

Firm Registration No.: 104767W

Rajen Ashar

Partner

Membership No.: 048243

Keki M. Mistry

Director

(DIN: 00008886)

Samir H. Shah

Executive Director & CFO

(DIN: 08114828)

Ritesh Kumar

Managing Director & CEO

(DIN: 02213019)

Anuj Tyagi

Executive Director &

Chief Business Ofcer

(DIN: 07505313)

Dayananda V. Shetty

Company Secretary and

Chief Compliance Ofcer

(Membership No: FCS 4638)

Revenue Accounts for the year ended March 31, 2020

FORM B - RA

IRDAI Registration No: 146

Date of Registration with the IRDAI: July 09, 2010

(` ’000)

Particulars

Schedule

FIRE INSURANCE MARINE INSURANCE MISCELLANEOUS

INSURANCE

TOTAL

For the year

ended

March 31,

2020

For the year

ended

March 31,

2019

For the year

ended

March 31,

2020

For the year

ended

March 31,

2019

For the year

ended

March 31,

2020

For the year

ended

March 31,

2019

For the year

ended

March 31,

2020

For the year

ended

March 31,

2019

1 Premiums Earned (Net) (Refer Note 37(b)

of Schedule 16)

1 1,459,430 991,370 721,251 603,252 42,322,834 36,505,485 44,503,515 38,100,107

2 Prot/Loss on Sale/Redemption of

Investments (Net)

29,659 29,234 5,832 6,776 612,505 542,989 647,996 578,999

3 Others:

Investment Income from Terrorism Pool 30,188 44,972 — — — — 30,188 44,972

Miscellaneous Income/Liabilities written

back

1,487 1,522 752 950 46,238 57,515 48,477 59,987

4 Interest, Dividend and Rent – Gross

(Refer Note 38 of Schedule 16)

305,323 254,179 60,035 58,917 6,305,301 4,721,052 6,670,659 5,034,147

TOTAL (A) 1,826,087 1,321,277 787,870 669,895 49,286,878 41,827,040 51,900,835 43,818,212

1 Claims Incurred (Net) (Refer Note 37(b)

of Schedule 16)

2 1,021,393 528,742 589,499 562,260 33,630,295 28,000,813 35,241,187 29,091,815

2 Commission (Net) 3 (292,128) (549,837) 95,319 91,924 (1,922,231) (1,068,042) (2,119,040) (1,525,955)

3 Operating Expenses Related to Insurance

Business

4 1,605,039 1,009,011 293,548 246,238 12,911,162 10,058,045 14,809,749 11,313,294

4 Premium Deciency (Refer Note 27 of

Schedule 16)

— — — — — — — —

TOTAL (B) 2,334,304 987,916 978,366 900,422 44,619,226 36,990,816 47,931,896 38,879,154

Operating Prot/(Loss) (A-B) (508,217) 333,361 (190,496) (230,527) 4,667,652 4,836,224 3,968,939 4,939,058

APPROPRIATIONS

Transfer to Shareholders’ Account (508,217) 333,361 (190,496) (230,527) 4,667,652 4,836,224 3,968,939 4,939,058

Transfer to Catastrophe Reserve — — — — — — — —

Transfer to Other Reserves — — — — — — — —

TOTAL (C) (508,217) 333,361 (190,496) (230,527) 4,667,652 4,836,224 3,968,939 4,939,058

NOTES TO ACCOUNTS 16

Schedules referred to above and the notes to accounts form an integral part of the Revenue Accounts

Signatures to the Revenue Account and Schedules 1 to 16

In terms of our report attached For and on behalf of the Board of Directors

B. K. Khare & Co.

Chartered Accountants

Firm Registration No.: 105102W

Padmini Khare Kaicker

Partner

Membership No.: 044784

Mumbai,

Dated: November 13, 2020

G. M. Kapadia & Co.

Chartered Accountants

Firm Registration No.: 104767W

Rajen Ashar

Partner

Membership No.: 048243

Keki M. Mistry

Director

(DIN: 00008886)

Samir H. Shah

Executive Director & CFO

(DIN: 08114828)

Ritesh Kumar

Managing Director & CEO

(DIN: 02213019)

Anuj Tyagi

Executive Director &

Chief Business Ofcer

(DIN: 07505313)

Dayananda V. Shetty

Company Secretary and

Chief Compliance Ofcer

(Membership No: FCS 4638)

66 13th Annual Report 2019-20

Schedules

Annexed to and forming part of the Revenue Accounts

SCHEDULE - 1

PREMIUM EARNED (NET)

(` ’000)

Particulars

For the year ended March 31, 2020 For the year ended March 31, 2019

Fire

Marine

* Miscellaneous Total Fire

Marine

**Miscellaneous Total

Marine Cargo Marine Hull Marine Total Marine Cargo Marine Hull Marine Total

Premium from direct business written-net

of GST

9,794,450 1,613,803 230,254 1,844,057 84,657,366 96,295,873 7,196,477 1,423,722 377,704 1,801,426 77,130,605 86,128,508

Add: Premium on Re-insurance accepted 891,437 102,814 — 102,814 310,840 1,305,091 734,006 125,023 - 125,023 230,466 1,089,495

Less: Premium on Re-insurance ceded (8,419,667) (998,423) (229,492) (1,227,915) (39,284,722) (48,932,304) (6,869,655) (895,928) (376,308) (1,272,236) (35,348,238) (43,490,129)

Net Premium 2,266,220 718,194 762 718,956 45,683,484 48,668,660 1,060,828 652,817 1,396 654,213 42,012,833 43,727,874

Add/(Less): Adjustment for changes in reserve

for unexpired risks

(806,790) 1,661 634 2,295 (3,360,650) (4,165,145) (69,458) (51,174) 213 (50,961) (5,507,348) (5,627,767)

Total Premium Earned (Net) 1,459,430 719,855 1,396 721,251 42,322,834 44,503,515 991,370 601,643 1,609 603,252 36,505,485 38,100,107

* Miscellaneous Premium Breakup for the year ended March 31, 2020

(` ’000

)

Particulars

Miscellaneous

Motor

Workmens

Compensation

Public

Liability

Product

Liability

Engineering Aviation

Personal

Accident

Health

Insurance

Others

Total

Miscellaneous

Motor-OD Motor-TP Motor Total Other

Liability

Home Specialty Weather/

Crop

Others

Premium from direct business written-net

of GST

15,702,268 18,178,476 33,880,744 200,988 36,112 3,994 1,910,877 127,101 6,578,533 16,031,212 807,010 11,731 1,530,512 21,631,396 1,907,156 84,657,366

Add: Premium on Re-insurance accepted — — — — 3,389 708 87,961 — 14,039 — 42,137 — 162,071 — 535 310,840

Less: Premium on Re-insurance ceded (3,194,070) (5,676,132) (8,870,202) (13,647) (22,181) (1,445) (1,348,224) (124,003) (2,196,287) (6,440,764) (509,160) (3,444) (1,060,868) (17,829,996) (864,501) (39,284,722)

Net Premium 12,508,198 12,502,344 25,010,542 187,341 17,320 3,257 650,614 3,098 4,396,285 9,590,448 339,987 8,287 631,715 3,801,400 1,043,190 45,683,484

Add/(Less): Adjustment for changes in reserve

for unexpired risks

188,213 (979,779) (791,566) (6,356) (17) 624 (140,443) 229 (194,452) (1,896,880) (5,603) 9,003 (77,874) (18,300) (239,015) (3,360,650)

Total Premium Earned (Net) 12,696,411 11,522,565 24,218,976 180,985 17,303 3,881 510,171 3,327 4,201,833 7,693,568 334,384 17,290 553,841 3,783,100 804,175

42,322,834

** Miscellaneous Premium Breakup for the year ended March 31, 2019

(` ’000)

Particulars

Miscellaneous

Motor

Workmens

Compensation

Public

Liability

Product

Liability

Engineering Aviation

Personal

Accident

Health

Insurance

Others

Total

Miscellaneous

Motor-OD Motor-TP Motor Total Other

Liability

Home Specialty Weather/

Crop

Others

Premium from direct business written-net

of GST

16,351,195 14,248,661 30,599,856 193,318 35,745 10,095 1,490,983 280,321 6,944,604 12,787,131 829,746 25,028 1,261,306 20,994,017 1,678,455 77,130,605

Add: Premium on Re-insurance accepted — — — — 1,592 358 81,768 (2,311) 19,958 77 38,341 — 89,173 — 1,510 230,466

Less: Premium on Re-insurance ceded (3,745,085) (3,309,114) (7,054,199) (31,209) (18,692) (4,606) (1,211,460) (278,104) (2,112,010) (5,127,818) (523,750) (8,148) (868,960) (17,193,857) (915,425) (35,348,238)

Net Premium 12,606,110 10,939,547 23,545,657 162,109 18,645 5,847 361,291 (94) 4,852,552 7,659,390 344,337 16,880 481,519 3,800,160 764,540 42,012,833

Add/(Less): Adjustment for changes in reserve

for unexpired risks

(945,292) (2,388,120) (3,333,412) (23,117) (2,152) (297) (6,347) 609 (1,031,202) (949,049) (61,393) (325) (24,237) 77,461 (153,887) (5,507,348)

Total Premium Earned (Net) 11,660,818 8,551,427 20,212,245 138,992 16,493 5,550 354,944 515 3,821,350 6,710,341 282,944 16,555 457,282 3,877,621

610,653 36,505,485

Schedules

Annexed to and forming part of the Revenue Accounts

SCHEDULE - 2

CLAIMS INCURRED (NET)

(` ’000)

Particulars

For the year ended March 31, 2020 For the year ended March 31, 2019

Fire

Marine

* Miscellaneous Total Fire

Marine

** Miscellaneous Total

Marine Cargo Marine Hull Marine Total Marine Cargo Marine Hull Marine Total

Claims paid direct 3,458,660 1,195,615 42,410 1,238,025 38,579,792 43,276,477 2,776,590 1,142,648 138,058 1,280,706 45,892,103 49,949,399

Add: Claims on Re-insurance accepted 234,881 95,902 - 95,902 79,347 410,130 162,601 85,316 - 85,316 97,158 345,075

Less: Claims on Re-insurance ceded (2,924,805) (684,474) (42,276) (726,750) (14,167,690) (17,819,245) (2,474,923) (663,867) (137,917) (801,784) (24,485,562) (27,762,269)

Net Claims paid 768,736 607,043 134 607,177 24,491,449 25,867,362 464,268 564,097 141 564,238 21,503,699 22,532,205

Add: Claims Outstanding at the end of the year 1,079,659 480,513 8,331 488,844 45,993,376 47,561,879 827,001 501,588 4,934 506,522 34,253,316 35,586,839

Less: Claims Outstanding on account of Merger

as on March 1, 2020

— — — — (2,601,214) (2,601,214) — — — — — —

Less: Claims Outstanding at the beginning of

the year

(827,002) (501,588) (4,934) (506,522) (34,253,316) (35,586,840) (762,527) (505,274) (3,226) (508,500) (27,756,202) (29,027,229)

Total Claims Incurred (Net) 1,021,393 585,968 3,531 589,499 33,630,295 35,241,187 528,742 560,411 1,849 562,260 28,000,813 29,091,815

* Miscellaneous Claims Incurred (Net) Breakup for the year ended March 31, 2020

(` ’000)

Particulars

Miscellaneous

Motor

Workmens

Compensation

Public

Liability

Product

Liability

Engineering Aviation

Personal

Accident

Health

Insurance

Others

Total

Miscellaneous

Motor-OD Motor-TP Motor Total Other

Liability

Home Specialty Weather/

Crop

Others

Claims paid direct 13,026,967 3,026,010 16,052,977 122,377 37 — 887,857 132,705 1,927,247 9,043,611 273,052 4,538 562,538 8,579,875 992,978 38,579,792

Add: Claims on Re-insurance accepted — — — — — — 13,322 27,785 6 3,967 34,267 — — — — 79,347

Less: Claims on Re-insurance ceded (2,964,974) (212,790) (3,177,764) (6,198) (2) — (413,927) (126,177) (581,888) (2,145,852) (157,058) (278) (473,153) (6,768,645) (316,748) (14,167,690)

Net Claims paid 10,061,993 2,813,220 12,875,213 116,179 35 — 487,252 34,313 1,345,365 6,901,726 150,261 4,260 89,385 1,811,230 676,230 24,491,449

Add: Claims Outstanding at the end of the year 1,936,519 33,225,630 35,162,149 189,817 11,027 8,612 406,369 88,080 1,267,255 4,035,386 148,886 14,936 196,600 3,986,642 477,617 45,993,376

Less: Claims Outstanding on account of Merger as on

March 1, 2020

— — — — — — — — (116,339) (2,484,875) — — — —

— (2,601,214)

Less: Claims Outstanding at the beginning of the year (1,617,909) (27,236,171) (28,854,080) (133,049) (8,226) (7,797) (183,347) (146,445) (630,020) (1,171,413) (134,800) (6,159) (171,597) (2,524,310) (282,073) (34,253,316)

Total Claims Incurred (Net) 10,380,603 8,802,679 19,183,282 172,947 2,836 815 710,274 (24,052) 1,866,261 7,280,824 164,347 13,037 114,388 3,273,562 871,774 33,630,295

** Miscellaneous Claims Incurred (Net) Breakup for the year ended March 31, 2019

(` ’000)

Particulars

Miscellaneous

Motor

Workmens

Compensation

Public

Liability

Product

Liability

Engineering Aviation

Personal

Accident

Health

Insurance

Others

Total

Miscellaneous

Motor-OD Motor-TP Motor Total Other

Liability

Home Specialty Weather/Crop Others

Claims paid direct 11,585,448 3,918,507 15,503,955 64,487 3 — 630,338 199,786 1,675,395 6,659,100 1,152,400 5,674 181,791 18,608,349 1,210,825 45,892,103

Add: Claims on Re-insurance accepted — — — — — — 6,818 71,565 1,627 16,862 — — 286 — — 97,158

Less: Claims on Re-insurance ceded (2,822,968) (2,421,586) (5,244,554) (3,383) — — (323,893) (170,211) (477,744) (1,621,029) (1,121,657) (440) (81,414) (14,794,668) (646,569) (24,485,562)

Net Claims paid 8,762,480 1,496,921 10,259,401 61,104 3 — 313,263 101,140 1,199,278 5,054,933 30,743 5,234 100,663 3,813,681 564,256 21,503,699

Add: Claims Outstanding at the end of the year 1,617,909 27,236,171 28,854,080 133,049 8,226 7,797 183,347 146,445 630,020 1,171,413 134,800 6,159 171,597 2,524,310 282,073 34,253,316

Less: Claims Outstanding at the beginning of the year (1,246,074) (21,336,949) (22,583,023) (101,382) (9,434) (8,876) (184,002) (184,764) (637,377) (858,223) (87,307) (8,450) (169,933) (2,698,323) (225,108) (27,756,202)

Total Claims Incurred (Net)

9,134,315 7,396,143 16,530,458 92,771 (1,205) (1,079) 312,608 62,821 1,191,921 5,368,123 78,236 2,943 102,327 3,639,668 621,221 28,000,813

68 13th Annual Report 2019-20

Schedules

Annexed to and forming part of the Revenue Accounts

SCHEDULE - 3

COMMISSION (NET)

(` ’000)

Particulars

For the year ended March 31, 2020 For the year ended March 31, 2019

Fire

Marine

* Miscellaneous Total Fire

Marine

** Miscellaneous

Total

Marine Cargo Marine Hull Marine Total Marine Cargo Marine Hull Marine Total

Commission paid direct 860,375 180,992 1,845 182,837 6,473,914 7,517,126 560,518 177,467 13,296 190,763 5,807,377 6,558,658

Add: Commission paid on Re-insurance accepted 47,297 4,652 — 4,652 44,451 96,400 31,176 6,835 — 6,835 31,964 69,975

Less: Commission received on Re-insurance ceded (1,199,800) (88,975) (3,195) (92,170) (8,440,596) (9,732,566) (1,141,531) (84,216) (21,458) (105,674) (6,907,383) (8,154,588)

Net commission paid/(received) (292,128) 96,669 (1,350) 95,319 (1,922,231) (2,119,040) (549,837) 100,086 (8,162) 91,924 (1,068,042) (1,525,955)

* Miscellaneous Commission Breakup for the year ended March 31, 2020

(` ’000)

Particulars

Miscellaneous

Motor

Workmens

Compensation

Public

Liability

Product

Liability

Engineering Aviation

Personal

Accident

Health

Insurance

Others

Total

Miscellaneous

Motor-OD Motor-TP Motor Total Other

Liability

Home Specialty Weather/Crop Others

Commission paid direct 2,800,957 247,466 3,048,423 26,000 2,593 600 119,062 4,602 821,333 2,056,885 84,187 1,054 164,247 37,427 107,501 6,473,914

Add: Commission paid on Re-insurance accepted — — — — 733 124 6,019 — 767 — 8,595 — 28,208 — 5 44,451

Less: Commission received on Re-insurance ceded (639,546) (1,342,193) (1,981,739) (2,479) (1,032) (86) (261,379) (10,024) (1,157,245) (3,566,116) (54,733) (313) (153,398) (1,128,813) (123,239) (8,440,596)

Net commission paid/(received) 2,161,411 (1,094,727) 1,066,684 23,521 2,294 638 (136,298) (5,422) (335,145) (1,509,231) 38,049 741 39,057 (1,091,386) (15,733) (1,922,231)

** Miscellaneous Commission Breakup for the year ended March 31, 2019

(` ’000)

Particulars

Miscellaneous

Motor

Workmens

Compensation

Public

Liability

Product

Liability

Engineering Aviation

Personal

Accident

Health

Insurance

Others

Total

Miscellaneous

Motor-OD Motor-TP Motor Total Other

Liability

Home Specialty Weather/Crop Others

Commission paid direct 2,943,480 166,349 3,109,829 23,711 2,989 1,308 105,251 5,548 828,854 1,411,611 98,154 1,663 145,877 4,858 67,724 5,807,377

Add: Commission paid on Re-insurance accepted — — — — 315 36 5,698 85 407 9 7,544 — 17,851 — 19 31,964

Less: Commission received on Re-insurance ceded (750,610) (581,448) (1,332,058) (1,976) (768) (458) (214,135) (12,210) (1,126,520) (2,879,158) (53,057) (441) (122,237) (977,257) (187,108) (6,907,383)

Net commission paid/(received) 2,192,870 (415,099) 1,777,771 21,735 2,536 886 (103,186) (6,577) (297,259) (1,467,538) 52,641 1,222 41,491 (972,399) (119,365) (1,068,042)

SCHEDULE - 3 A

COMMISSION PAID DIRECT

(` ’000)

Particulars

For the year ended March 31, 2020 For the year ended March 31, 2019

Fire Marine Miscellaneous Total Fire Marine Miscellaneous Total

Agents 41,648 23,927 1,219,947 1,285,522 33,984 35,087 915,675 984,746

Brokers 607,790 158,138 2,395,116 3,161,044 361,932 154,441 2,186,388 2,702,761

Corporate Agency 210,829 771 2,424,101 2,635,701 164,556 1,234 2,343,261 2,509,051

Others: Web aggregator, CSC, IMF, MISP and POSP 108 1 434,750 434,859 46 1 362,053 362,100

Total 860,375 182,837 6,473,914 7,517,126 560,518 190,763 5,807,377 6,558,658

Schedules

Annexed to and forming part of the Revenue Accounts

SCHEDULE - 4

OPERATING EXPENSES RELATED TO INSURANCE BUSINESS

(` ’000)

Particulars

For the year ended March 31, 2020 For the year ended March 31, 2019

Fire

Marine

* Miscellaneous Total Fire

Marine

** Miscellaneous Total

Marine Cargo Marine Hull Marine Total Marine Cargo Marine Hull Marine Total

Employees’ remuneration and welfare benets 453,941 73,203 9,819 83,022 3,623,039 4,160,002 304,259 59,693 14,558 74,251 2,981,431 3,359,941

Travel, conveyance and vehicle running

expenses

33,135 5,343 717 6,060 264,460 303,655 15,623 3,066 747 3,813 153,087 172,523

Training expenses 80,933 13,051 1,751 14,802 645,954 741,689 57,747 11,330 2,763 14,093 565,871 637,711

Rents, rates and taxes 43,019 6,938 930 7,868 343,342 394,229 34,032 6,677 1,628 8,305 333,477 375,814

Repairs 15,654 2,524 339 2,863 124,939 143,456 13,885 2,724 665 3,389 136,061 153,335

Printing and stationery 18,773 3,027 406 3,433 149,831 172,037 13,430 2,634 643 3,277 131,596 148,303

Communication 6,352 1,025 137 1,162 50,695 58,209 5,239 1,027 251 1,278 51,335 57,852

Legal and professional charges 327,318 52,784 7,080 59,864 2,538,715 2,925,897 216,908 42,556 10,378 52,934 2,125,477 2,395,319

Auditors’ fees, expenses etc

(a) as auditors 1,032 167 22 189 8,233 9,454 921 181 44 225 9,024 10,170

(b) as advisor or in any other capacity, in

respect of:

(i) Taxation matters — — — — — — — — — — — —

(ii) Insurance matters — — — — — — — — — — — —

(iii) Management services — — — — — — — — — — — —

Advertisement and publicity 466,720 75,264 10,095 85,359 3,725,024 4,277,103 216,946 42,563 10,380 52,943 2,125,849 2,395,738

Interest and bank charges 28,978 4,673 627 5,300 405,865 440,143 21,783 4,274 1,042 5,316 384,216 411,314

Others:

Electricity expenses 8,973 1,447 194 1,641 71,616 82,230 6,997 1,372 335 1,707 68,560 77,264

Ofce expenses 4,219 680 91 771 33,674 38,664 3,616 710 173 883 35,443 39,942

Miscellaneous expenses 10,821 1,745 234 1,979 86,368 99,168 16,176 3,174 774 3,948 158,508 178,632

Information Technology expenses 44,023 7,099 952 8,051 351,362 403,436 36,656 7,191 1,754 8,945 359,189 404,790

Postage and courier 16,113 2,599 349 2,948 128,603 147,664 13,788 2,705 660 3,365 135,106 152,259

Loss/(Prot) on sale of assets (net) (112) (18) (2) (20) (894) (1,026) 263 52 12 64 2,577 2,904

Depreciation 44,642 7,199 965 8,164 356,305 409,111 30,541 5,992 1,461 7,453 299,272 337,266

Total Operating Expenses 1,605,039 258,831 34,717

293,548 12,911,162 14,809,749 1,009,011 197,960 48,278 246,238 10,058,045 11,313,294

70 13th Annual Report 2019-20

Schedules

Annexed to and forming part of the Revenue Accounts

SCHEDULE - 4 (Continued)

* Miscellaneous Operating expenses related to Insurance business Breakup for the year ended March 31, 2020

(` ’000)

Particulars

Miscellaneous

Motor

Workmens

Compensation

Public

Liability

Product

Liability

Engineering Aviation

Personal

Accident

Health

Insurance

Others

Total

Miscellaneous

Motor-OD Motor-TP Motor Total Other

Liability

Home Specialty Weather/Crop Others

Employees’ remuneration and welfare benets 669,602 775,196 1,444,798 8,571 1,684 200 84,925 5,420 281,131 683,629 36,211 500 72,178 922,441 81,351 3,623,039

Travel, conveyance and vehicle running expenses 48,877 56,584 105,461 625 123 15 6,199 396 20,521 49,901 2,642 37 5,269 67,333 5,938 264,460

Training expenses 119,383 138,211 257,594 1,528 301 36 15,141 966 50,123 121,884 6,456 89 12,870 164,462 14,504 645,954

Rents, rates and taxes 63,455 73,462 136,917 812 160 19 8,048 514 26,642 64,785 3,432 48 6,840 87,416 7,709 343,342

Repairs 23,091 26,732 49,823 296 58 7 2,929 187 9,695 23,575 1,249 17 2,489 31,810 2,804 124,939

Printing and stationery 27,692 32,058 59,750 354 70 8 3,512 224 11,626 28,271 1,497 21 2,985 38,148 3,365 149,831

Communication

9,369 10,847 20,216 119 24 3 1,188 76 3,934 9,566 507 7 1,010 12,907 1,138 50,695

Legal and professional charges 482,822 558,962 968,074 6,180 1,215 145 61,236 3,908 202,712 492,937 26,110 361 52,044 665,134 58,659 2,538,715

Auditors’ fees, expenses etc

(a) as auditors 1,522 1,762 3,284 19 4 — 193 12 639 1,554 82 1 164 2,096 185 8,233

(b) as advisor or in any other capacity, in respect of:

(i) Taxation matters — — — — — — — — — — — — — — — —

(ii) Insurance matters — — — — — — — — — — — — — — — —

(iii) Management services — — — — — — — — — — — — — — — —

Advertisement and publicity 688,450 797,017 1,485,467 8,812 1,732 206 87,316 5,573 289,045 702,872 37,230 514 74,210 948,407 83,640 3,725,024

Interest and bank charges 42,744 49,485 92,229 547 108 13 5,421 346 17,946 43,639 2,311 32 4,608 233,473 5,192 405,865

Others:

Electricity expenses 13,236 15,324 28,560 169 33 4 1,679 107 5,557 13,514 714 10 1,427 18,234 1,608 71,616

Ofce expenses 6,224 7,205 13,429 80 14 2 789 50 2,613 6,354 337 5 671 8,574 756 33,674

Miscellaneous expenses 15,962 18,479 34,441 204 40 5 2,024 129 6,702 16,296 863 12 1,721 21,990 1,941 86,368

Information Technology expenses 64,938 75,178 140,116 831 163 19 8,236 526 27,264 66,298 3,512 49 7,000 89,458 7,890 351,362

Postage and courier 23,768 27,517 51,285 304 60 7 3,015 192 9,979 24,266 1,285 18 2,562 32,743

2,887 128,603

Loss/(Prot) on sale of assets (net) (165) (192) (357) (2) — — (21) (1) (70) (169) (9) — (18) (227) (20) (894)

Depreciation 65,852 76,236 142,088 843 166 20 8,352 533 27,648 67,231 3,561 49 7,098 90,716 8,000 356,305

Total Operating Expenses 2,367,567 2,740,926 5,034,783 30,302 5,957 709 300,277 19,164 994,020 2,417,162 128,030 1,771 255,208 3,436,142 287,637 12,911,162

Schedules

Annexed to and forming part of the Revenue Accounts

SCHEDULE - 4 (Continued)

** Miscellaneous Operating expenses related to Insurance business Breakup for the year ended March 31, 2019

(` ’000)

Particulars

Miscellaneous

Motor

Workmens

Compensation

Public

Liability

Product

Liability

Engineering Aviation

Personal

Accident

Health

Insurance

Others

Total

Miscellaneous

Motor-OD Motor-TP Motor Total Other

Liability

Home Specialty Weather/Crop Others

Employees’ remuneration and welfare benets 630,223 549,185 1,179,408 7,450 1,439 403 60,327 10,715 268,435 492,857 33,459 965 52,051 809,171 64,751 2,981,431

Travel, conveyance and vehicle running expenses 32,360 28,199 60,559 383 74 21 3,098 550 13,783 25,307 1,718 48 2,673 41,548 3,325 153,087

Training expenses 119,616 104,234 223,850 1,414 273 76 11,450 2,034 50,948 93,543 6,350 183 9,879 153,579 12,290 565,871

Rents, rates and taxes 70,491 61,427 131,918 833 161 45 6,748 1,199 30,025 55,127 3,742 108 5,822 90,507 7,242 333,477

Repairs 28,761 25,063 53,824 340 66 19 2,753 489 12,250 22,492 1,527 44 2,375 36,927 2,955 136,061

Printing and stationery 27,817 24,240 52,057 329 64 18 2,663 473 11,848 21,754 1,476 43 2,297 35,716 2,858 131,596

Communication

10,851 9,456 20,307 128 25 8 1,039 184 4,622 8,486 576 17 896 13,932 1,115 51,335

Legal and professional charges 449,289 391,517 840,806 5,312 1,026 287 43,007 7,639 191,368 351,360 23,853 688 37,108 576,862 46,161 2,125,477

Auditors’ fees, expenses etc

(a) as auditors 1,908 1,663 3,571 23 4 1 183 32 811 1,492 101 3 158 2,449 196 9,024

(b) as advisor or in any other capacity, in respect of:

(i) Taxation matters — — — — — — — — — — — — — — — —

(ii) Insurance matters — — — — — — — — — — — — — — — —

(iii) Management services — — — — — — — — — — — — — — — —

Advertisement and publicity 449,368 391,585 840,953 5,313 1,026 287 43,015 7,641 191,402 351,421 23,857 688 37,114 576,963 46,169 2,125,849

Interest and bank charges 45,119 39,317 84,436 533 103 29 4,318 767 19,218 35,285 2,395 69 3,726 228,699 4,636 384,216

Others

Electricity expenses 14,492 12,629 27,121 171 33 9 1,387 246 6,173 11,334 769 22 1,197 18,609 1,489 68,560

Ofce expenses 7,492 6,529 14,021 89 17 5 717 127 3,191 5,859 398 11 619 9,619 770 35,443

Miscellaneous expenses 33,506 29,198 62,704 396 77 21 3,207 570 14,273 26,203 1,779 51 2,767 43,020 3,442 158,508

Information Technology expenses 75,926 66,163 142,089 898 173 49 7,268 1,291 32,340 59,377 4,031 116 6,271 97,485 7,801 359,189

Postage and courier 28,559 24,887 53,446 338 65 18 2,734 486 12,164 22,334 1,516 44 2,359 36,668

2,934 135,106

Loss/(Prot) on sale of assets (net) 545 475 1,020 6 1 — 52 9 232 426 29 1 46 699 56 2,577

Depreciation 63,261 55,126 118,387 748 144 40 6,056 1,076 26,945 49,471 3,359 97 5,225 81,224 6,500 299,272

Total Operating Expenses 2,090,000 1,821,255 3,911,254 24,710 4,772 1,336 200,061 35,535 890,206 1,634,453 110,958 3,199 172,617 2,854,211 214,732 10,058,045

72 13th Annual Report 2019-20

Schedules

Annexed to and forming part of the Balance Sheet

SCHEDULE – 5

SHARE CAPITAL

Particulars As at

March 31, 2020

(` ’000)

As at

March 31, 2019

(` ’000)

Authorised Capital

2000,000,000 Equity Shares of ` 10/- each

(Previous year: 1500,000,000 Equity Shares of ` 10/- each)

20,000,000 15,000,000

Issued Capital

605,842,050 Equity Shares of ` 10/- each

(Previous year: 605,422,050 Equity Shares of ` 10/- each)

6,058,421 6,054,221

Subscribed Capital

605,842,050 Equity Shares of ` 10/- each

(Previous year: 605,422,050 Equity Shares of ` 10/- each)

6,058,421 6,054,221

Called-up Capital

605,842,050 Equity Shares of ` 10/- each

(Previous year: 605,422,050 Equity Shares of ` 10/- each)

6,058,421 6,054,221

Less: Calls unpaid — —

Add: Equity Shares forfeited (Amount originally paid up) — —

Less: Preliminary Expenses

— —

Total

6,058,421 6,054,221

Of the above 305,841,738 (Previous year 305,691,738) Equity Shares of ` 10/- each are held by Housing

Development Finance Corporation Limited, the Holding Company.

SCHEDULE – 5A

SHARE CAPITAL

PATTERN OF SHAREHOLDING

As at March 31, 2020 As at March 31, 2019

[As certied by the Management]

(Number of Shares) (% of Holding) (Number of Shares) (% of Holding)

Promoters:

Indian: Housing Development

Finance Corporation Limited 305,841,738 50.48% 305,691,738 50.49%

Foreign: ERGO International AG 292,202,312 48.23% 292,202,312 48.27%

Others: Employees

7,798,000 1.29% 7,528,000 1.24%

Total

605,842,050 100.00% 605,422,050 100.00%

Schedules

Annexed to and forming part of the Balance Sheet

SCHEDULE – 6

RESERVES AND SURPLUS

Particulars As at

March 31, 2020

(` ’000)

As at

March 31, 2019

(` ’000)

Reserve on Amalgamation (Refer Note 3 of

Schedule 16)

3,003,014 —

Capital Redemption Reserve — —

Share Premium

Balance Brought forward from Previous Year 8,403,217 8,381,626

Add: Addition due to Merger (Refer Note 3 of

Schedule 16) 5,517,832 —

Add: Addition during the year

37,265 13,958,314 21,591 8,403,217

General Reserves

Balance Brought forward from Previous Year — —

Less: Debit balance in Prot and Loss Account — —

Less: Amount utilised for buy-back

— — — —

Contingency Reserve for Unexpired Risk — —

Catastrophe Reserve — —

Other Reserves

Debenture Redemption Reserve

Balance Brought forward from Previous Year 291,600 194,400

Add: Addition due to Merger (Refer Note 3 of

Schedule 16)

40,568 —

Add: Addition during the year

24,300 356,468 97,200 291,600

Balance of Prot/(Loss) in Prot and Loss Account

Balance Brought forward from Previous Year 5,074,847 2,984,374

Add: Prot during the year 3,269,418 2,187,673

Less: Transfer to Debenture Redemption

Reserve

(24,300) (97,200)

Less: On Merger (Refer Note 3 of Schedule 16)

(4,317,847) 4,002,118 — 5,074,847

Total

21,319,914 13,769,664

SCHEDULE – 7

BORROWINGS

Particulars As at

March 31, 2020

(` ’000)

As at

March 31, 2019

(` ’000)

Debentures/Bonds 5,040,000 3,500,000

(Refer Note 33 of Schedule 16)

Banks — —

Financial Institutions — —

Others

— —

Total

5,040,000 3,500,000

74 13th Annual Report 2019-20

Schedules

Annexed to and forming part of the Balance Sheet

SCHEDULE – 8

INVESTMENTS - SHAREHOLDERS (Refer Note 2 (p) and 10 of schedule 16)

Particulars As at

March 31, 2020

(` ’000)

As at

March 31, 2019

(` ’000)

LONG TERM INVESTMENTS

Government securities and Government guaranteed

bonds including Treasury Bills

6,075,261 5,156,561

Other Approved Securities 1,962,791 2,277,785

Other Investment:

— Equity 438,758 829,050

Less : Provision for diminution in value of Investments

(87,050) 351,708 (45,450) 783,599

— Preference 4,770 10,535

Mutual Funds 12,741 14,722

Derivative Instruments — —

Debentures/Bonds 4,467,528 4,162,752

Less : Provision for diminution in value of Investments*

(1,377,913) 3,089,615 (863,674) 3,299,078

Other Securities (Bank Deposits) 95,296 94,630

Subsidiaries — —

Investment Properties-Real Estate — —

Investments in Infrastructure and Housing

5,209,021 5,465,326

Sub-total (A) 16,801,203 17,102,236

SHORT TERM INVESTMENTS

Government securities and Government guaranteed

bonds including Treasury Bills

101,948 —

Other Approved Securities — —

Other Investment:

— Equity — —

— Preference — —

Mutual Funds 1,067,482 442,045

Derivative Instruments — —

Debentures/Bonds 1,495,371 1,003,768

Less : Provision for diminution in value of Investments *

(909,053) 586,318 (669,057) 334,711

Other Securities (Commercial Papers, Certicate of

Deposits & Bank Deposits)

458,512 298,572

Subsidiaries — —

Investment Properties-Real Estate — —

Investments in Infrastructure and Housing

764,721 794,196

Sub-total (B) 2,978,981 1,869,524

Total (A+B) 19,780,184 18,971,760

Schedules

Annexed to and forming part of the Balance Sheet

Note:

a) Aggregate value of the investments other than Equity Shares and Mutual Fund

As at

March 31, 2020

(` ’000)

As at

March 31, 2019

(` ’000)

Long term investments - Book Value 16,436,754 16,303,914

Market Value 17,010,850 16,455,221

Short term investments - Book Value 1,911,500 1,427,479

Market Value 1,918,447 1,433,363

b) Investments made outside India: ` Nil (Previous Year ` Nil)

* Refer Note 10 of Schedule 16

SCHEDULE – 8A

INVESTMENTS - POLICYHOLDERS (Refer Note 2 (p) and 10 of schedule 16)

Particulars As at

March 31, 2020

(` ’000)

As at

March 31, 2019

(` ’000)

LONG TERM INVESTMENTS

Government securities and Government guaranteed

bonds including Treasury Bills

35,624,602 19,588,304

Other Approved Securities 11,509,574 8,652,653

Other Investment:

— Equity 2,062,376 2,976,671

— Preference 27,968 40,020

Mutual Funds 74,714 55,924

Derivative Instruments — —

Debentures/Bonds 18,117,134 12,532,254

Other Securities (Bank Deposits) 558,804 359,470

Subsidiaries — —

Investment Properties-Real Estate — —

Investments in Infrastructure and Housing

30,545,080 20,761,212

Sub-total (A) 98,520,252 64,966,508

Schedule – 8 (Continued)

76 13th Annual Report 2019-20

Schedules

Annexed to and forming part of the Balance Sheet

Schedule – 8A (Continued)

Particulars As at

March 31, 2020

(` ’000)

As at

March 31, 2019

(` ’000)

SHORT TERM INVESTMENTS

Government securities and Government guaranteed

bonds including Treasury Bills

597,815 —

Other Approved Securities — —

Other Investment:

— Equity — —

— Preference — —

Mutual Funds 6,259,587 1,679,201

Derivative Instruments — —

Debentures/Bonds 3,438,098 1,271,474

Other Securities (Commercial Papers, Certicate of

Deposits & Bank Deposits)

2,688,658 1,134,190

Subsidiaries — —

Investment Properties-Real Estate — —

Investments in Infrastructure and Housing

4,484,234 3,016,923

Sub-total (B) 17,468,392 7,101,788

Total (A+B) 115,988,644 72,068,296

Note:

a) Aggregate value of the investments other than Equity Shares and Mutual Fund

As at

March 31, 2020

(` ’000)

As at

March 31, 2019

(` ’000)

Long term investments - Book Value 96,383,161 61,933,914

Market Value 99,749,596 62,508,686

Short term investments - Book Value 11,208,805 5,422,587

Market Value 11,249,542 5,444,935

b) Investments made outside India: ` Nil (Previous Year ` Nil)

Schedules

Annexed to and forming part of the Balance Sheet

SCHEDULE - 9

LOANS

Particulars As at

March 31, 2020

(` ’000)

As at

March 31, 2019

(` ’000)

SECURITY-WISE CLASSIFICATION

Secured

(a)

On mortgage of property

(aa) In India

— —

(bb) Outside India

— —

(b)

On Shares, Bonds, Government Securities

— —

(c)

Others

— —

Unsecured

— —

Total

— —

BORROWER-WISE CLASSIFICATION

(a)

Central and State Governments

— —

(b)

Banks and Financial Institutions

— —

(c)

Subsidiaries

— —

(d)

Industrial Undertakings

— —

(e)

Others

— —

Total

— —

PERFORMANCE-WISE CLASSIFICATION

(a)

Loans classied as standard

(aa) In India

— —

(bb) Outside India

— —

(b)

Non-performing loans less provisions

(aa) In India

— —

(bb) Outside India

— —

Total

— —

MATURITY-WISE CLASSIFICATION

(a)

Short-Term

— —

(b)

Long-Term

— —

Total

— —

Total

— —

78 13th Annual Report 2019-20

Schedules

Annexed to and forming part of the Balance Sheet

SCHEDULE – 10

FIXED ASSETS

(` ’000)

Cost/Gross Block Depreciation/Amortisation Net Block

Particulars Opening Additions Addition on

Amalgamation

Deductions Closing Upto last

year

For the

period

Addition on

Amalgamation

On Sales/

Adjustments

To Date As at Year

end

Intangibles - Computer

Software*

1,488,405 179,914 672,591 — 2,340,910 1,165,700 159,594 504,478 (30) 1,829,802 511,108

(2,126,822) (182,120) — (820,537) (1,488,405) (1,867,990) (118,268) — (820,558) (1,165,700) (322,705)

Leasehold Property 127,424 44,698 — — 172,122 112,248 14,928 — — 127,176 44,946

(115,251) (20,818) — (8,645) (127,424) (113,826) (7,067) — (8,645) (112,248) (15,176)

Building 1,267,779 — — — 1,267,779 114,179 21,144 — — 135,323 1,132,456

(1,267,779) — — — (1,267,779) (93,035) (21,144) — — (114,179) (1,153,600)

Furniture and Fittings 318,042 17,403 103,178 819 437,804 135,704 29,000 84,003 570 248,137 189,667

(309,121) (16,618) — (7,697) (318,042) (111,644) (28,774) — (4,714) (135,704) (182,338)

Information Technology

Equipment

834,154 224,179 314,746 46,872 1,326,207 625,051 129,660 240,860 46,686 948,885 377,322

(742,305) (92,101) — (252) (834,154) (525,501) (99,957)

— (407) (625,051) (209,103)

Vehicles 179,934 29,110 54,350 32,095 231,299 62,495 36,732 43,735 22,866 120,096 111,203

(163,693) (53,403) — (37,162) (179,934) (57,322) (34,003) — (28,830) (62,495) (117,439)

Ofce Equipment 214,955 23,092 71,590 3,750 305,887 169,745 18,055 58,361 3,591 242,570 63,317

(193,333) (31,779) — (10,157) (214,955) (151,798) (28,053) — (10,106) (169,745) (45,210)

Total 4,430,693 518,396 1,216,455 83,536 6,082,008 2,385,122 409,113 931,437 73,683 3,651,989 2,430,019

(4,918,304) (396,839) — (884,450) (4,430,693) (2,921,116) (337,266) — (873,260) (2,385,123) (2,045,571)

Capital Work-in-progress

(includes advances)

89,479 347,576 128,190 170,911 394,334 — — — — — 394,334

(97,829) (178,307) — (186,657) (89,479) — — — — — (89,479)

Grand Total 4,520,172 865,972 1,344,645 254,447 6,476,342 2,385,122 409,113 931,437 73,683 3,651,989 2,824,353

(5,016,133) (575,146) — (1,071,107) (4,520,171) (2,921,116) (337,266) — (873,260) (2,385,123) (2,135,049)

*There are no internally generated Computer Software

(Figures in bracket pertains to Previous Year)

Schedules

Annexed to and forming part of the Balance Sheet

SCHEDULE - 11

CASH AND BANK BALANCES

Particulars As at

March 31, 2020

(` ’000)

As at

March 31, 2019

(` ’000)

Cash (including cheques, drafts and stamps) 358,572 1,125,482

Bank Balances

(a) Deposit Accounts — —

(aa) Short-term (due within 12 months) 4,315,811 56,183

(bb) Others 23,853 14,227

(b) Current Accounts 3,123,071 2,535,973

Money at Call and Short Notice

(a) With Banks — —

(b) With Other Institutions — —

Others

— —

Total

7,821,307 3,731,865

SCHEDULE - 12

ADVANCES AND OTHER ASSETS

Particulars As at

March 31, 2020

(` ’000)

As at

March 31, 2019

(` ’000)

ADVANCES

Reserve deposits with ceding companies — —

Application money for investments — —

Prepayments 558,113 249,148

Advance tax paid and taxes deducted at source 258,742 176,503

(Net of provision for taxation)

Others:

Advances to employees 14,370 3,348

Advances to suppliers (Refer Note 38 of

Schedule 16)

756,182 200,316

Less : Provisions for doubtful debts

(1,406) 754,776 — 200,316

Goods and Service tax Unutilised Credit 1,793,598 205,783

Sub-total (A) 3,379,599 835,098

80 13th Annual Report 2019-20

Schedules

Annexed to and forming part of the Balance Sheet

Schedule – 12 (Continued)

Particulars As at

March 31, 2020

(` ’000)

As at

March 31, 2019

(` ’000)

OTHER ASSETS

Income accrued on investments 3,794,158 2,729,968

Outstanding Premiums 14,497,129 12,162,554

(Refer Note 37(b) of Schedule 16)

Agents’ Balances 11,302 1,071

Less : Provisions for doubtful debts

(5,073) 6,229 — 1,071

Due from other entities carrying on insurance

business

1,416,200 1,914,917

(including reinsurers)

Less : Provisions for doubtful debts

— 1,416,200 (30,108) 1,884,809

Due from subsidiaries/holding Company 26 —

Others:

Deposits for premises 198,432 99,132

Less : Provisions for doubtful debts

(13,410) 185,022 (7,038) 92,094

Unclaimed amount of Policyholders

(Investment) (Refer Note 38 of Schedule 16)

144,396 133,798

Income on Unclaimed amount of Policyholders

(Investment) (Refer Note 38 of Schedule 16)

39,928 25,462

Sub-total (B) 20,083,088 17,029,756

Total (A+B) 23,462,687 17,864,854

SCHEDULE - 13

CURRENT LIABILITIES

Particulars As at

March 31, 2020

(` ’000)

As at

March 31, 2019

(` ’000)

Agents’ Balances 489,927 309,298

Balances due to other insurance companies 27,623,507 13,445,547

Premiums received in advance 7,578,930 3,557,773

Unallocated Premium 6,602,076 4,883,772

Unclaimed amount of Policyholders (Refer Note

28 & 38 of Schedule 16)

229,040 202,794

Unclaimed amount of Policyholders - Income

thereon (Refer Note 28 & 38 of Schedule 16)

39,928 25,462

Sundry creditors 4,411,203 5,503,046

Due to subsidiaries/holding company 97,576 69,740

Claims Outstanding 47,561,879 35,586,841

(Refer Note 24(b) & 37(b) of Schedule 16)

Schedules

Annexed to and forming part of the Balance Sheet

Particulars As at

March 31, 2020

(` ’000)

As at

March 31, 2019

(` ’000)

Due to Ofcers/Directors 3,600 3,378

Others:

Tax deducted at source 574,001 42,230

Other statutory dues 52,754 20,218

Interest payable on debentures 230,559 101,450

Total

95,494,980 63,751,549

SCHEDULE - 14

PROVISIONS

Particulars As at

March 31, 2020

(` ’000)

As at

March 31, 2019

(` ’000)

Reserve for Unexpired Risk (Refer Note 37(b) of

Schedule 16)

42,266,612 28,413,516

For taxation (less advance tax paid and taxes

deducted at source)

— —

For proposed dividends — —

For dividend distribution tax — —

Others:

Provision for Employee benets 125,002 75,305

Total

42,391,614 28,488,821

SCHEDULE - 15

MISCELLANEOUS EXPENDITURE

(To the extent not written off or adjusted)

Particulars As at

March 31, 2020

(` ’000)

As at

March 31, 2019

(` ’000)

Discount Allowed in issue of shares/debentures — —

Others:

Pre-operative expenses:

Opening balance — —

Incurred during the period — —

Less: Amortisation during the period — —

Total

— —

Schedule – 13 (Continued)

82 13th Annual Report 2019-20

Schedule – 16

NOTES TO ACCOUNTS

1. BACKGROUND

HDFC ERGO General Insurance Company Limited (“the Company”) was incorporated on December 27, 2007 as

a Company under the Companies Act, 1956.

The Company is registered with the Insurance Regulatory and Development Authority of India (“IRDAI”) and

continues to be in the business of underwriting general insurance policies and has launched general insurance

products which include Motor, Home, Accident & Health, Commercial, Specialty and Weather/Crop business

lines.

The Company’s Unsecured, Subordinated, Fully Paid-up, Listed, Redeemable Non-Convertible Debentures (NCDs)

are listed on the Bombay Stock Exchange (BSE).

The Company’s certicate of renewal of registration dated February 25, 2014 was valid till March 31, 2015.

Pursuant to Section 3 read with Section 3A of the Insurance Act, 1938 as amended by the Insurance Laws

(Amendment) Act, 2015, said certicate shall consequentially continue to be in force from April 1, 2015 onwards.

2. SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation

These nancial statements have been prepared under the historical cost convention, on an accrual basis

and in accordance with the applicable provisions of the Insurance Regulatory and Development Authority

(Preparation of Financial Statements and Auditor’s Report of Insurance Companies) Regulations, 2002, the

Insurance Act, 1938, as amended by Insurance Laws (Amendment) Act, 2015, the Insurance Regulatory and

Development Authority Act, 1999, circulars/notications and guidelines issued by IRDAI from time to time,

the Accounting Standards (AS) specied under Section 133 of the Companies Act, 2013, read together with

Rule 7 of Companies (Accounts) Rule 2014 dated March 31, 2014 and Companies (Accounting Standards)

Amendment Rules 2016 dated March 30, 2016 to the extent applicable and the relevant provisions of the

Companies Act, 2013.

Accounting policies applied have been consistent with previous year except where different treatment is

required as per new pronouncements made by the regulatory authorities. The management evaluates, all

recently issued or revised accounting pronouncements, on an ongoing basis.

(b) Use of estimates

The preparation of the nancial statements in conformity with accounting principles generally accepted

in India requires the management to make estimates and assumptions that affect the reported amount

of assets and liabilities as of the Balance Sheet date, reported amount of revenues and expenses for the

year and disclosures of contingent liabilities as of the Balance Sheet date. The estimates and assumptions

used in the accompanying nancial statements are based upon management’s evaluation of the relevant

facts and circumstances as of the date of the nancial statements. Actual results could differ from these

estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

Premium Income

Premium including Reinsurance accepted (net of Goods & Service Tax) is recognized as income over the

contract period or period of risk, as appropriate, after adjusting for unearned premium (unexpired risk).

Any subsequent revisions to or cancellations of premiums are accounted for in the period in which they

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

occur. Installment cases are recorded on installment due dates. Premium received in advance represents

premium received prior to commencement of the risk.

Income earned on investments

Interest income on investments is recognised on an accrual basis. Accretion of discount and amortisation

of premium relating to debt securities is recognised over the holding/maturity period on a constant yield

to maturity basis.

Dividend income is recognised when the right to receive dividend is established.

The net realised gains or losses on the debt securities are the difference between the net sale consideration

and the amortised cost, which is computed on a weighted average basis, as on the date of sale. In case of

listed equity shares/mutual fund units, the prot or loss on sale of investment includes the accumulated

changes in the fair value previously recognised under “Fair Value Change Account”. The difference between

the acquisition price and the maturity value of treasury bills is recognised as income in the revenue accounts

or the prot and loss account, as the case may be, over the remaining term of these instruments on a yield

to maturity basis.

Sale consideration for the purpose of realised gain/loss is net of brokerage and taxes, if any, and excludes

interest received on sales.

(d) Reinsurance ceded

Reinsurance premium ceded is accounted in the year in which the risk commences and over the period

of risk in accordance with the treaty arrangements with the reinsurers. Reinsurance premium ceded on

unearned premium is carried forward to the period of risk and is set off against related unearned premium.

Any subsequent revisions to or cancellations of premiums are accounted for in the year in which they occur.

Premium on excess of loss reinsurance cover is accounted as per the terms of the reinsurance arrangements.

(e) Commission received

Commission on reinsurance ceded is recognised as income on ceding of reinsurance premium.

Prot commission under reinsurance treaties, wherever applicable, is recognised in the year of nal

determination of the prots and as intimated by the Reinsurer.

(f) Reserve for Unexpired Risk

Reserve for unexpired risk represents that part of the net premium written which is attributable to and

allocated to the succeeding accounting period. Reserve for unexpired risk is calculated on the basis of 1/365

method in all segment subject to a minimum of 100% in case of Marine Hull business and based on Net

Premium Written during the year, whichever is higher as per Circular No. IRDA/F&A/CIR/CPM/056/03/2016

dated April 4, 2016.

(g) Premium deciency

Premium deciency is recognised for the Company as a whole on an annual basis. Premium deciency

is recognised if the sum of the expected claim costs, related expenses and maintenance cost (related to

claims handling) exceeds related reserve for unexpired risk. The expected claim costs are calculated and

duly certied by the Appointed Actuary.

84 13th Annual Report 2019-20

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

(h) Claims incurred

Claims incurred comprises of claims paid (net of salvage and other recoveries), change in estimated

liability for outstanding claims made following a loss occurrence reported, change in estimated liability for

claims incurred but not reported (IBNR) and claims incurred but not enough reported (IBNER) and specic

settlement costs comprising survey, legal and other directly attributable expenses.

Provision is made for estimated value of outstanding claims at the Balance Sheet date net of reinsurance,

salvage and other recoveries. Such provision is made on the basis of the ultimate amounts that are likely

to be paid on each claim, established by the management in light of past experience and progressively

modied for changes as appropriate, on availability of further information and include claim settlement

costs likely to be incurred to settle outstanding claims.

Claims (net of amounts receivable from reinsurers/coinsurers) are recognised on the date of intimation

based on estimates from surveyors/insured in the respective revenue accounts.

The estimated liability for claims incurred but not reported (IBNR) and claims incurred but not enough

reported (IBNER) has been estimated by the Appointed Actuary in compliance with guidelines issued by IRDAI

vide circular No. 11/IRDA/ACTL/IBNR/2005-06 dated June 8, 2005 and applicable provisions of Guidance

Note 21 issued by the Institute of Actuaries of India. The Appointed Actuary has used generally accepted

actuarial methods for each product category as considered appropriate depending upon the availability

of past data as well as appropriateness of the different methods to the different lines of businesses. The

above elements of estimates of liability for claims are periodically reviewed by the Appointed Actuary and

adjusted based on recent experience and emerging trends.

(i) Salvage Recoveries

Salvaged vehicles are recognised at net realizable value and are deducted from the claim settlement made

against the same. Salvaged vehicles on hand are treated as stock-in-trade and are recognised at estimated

net realizable value based on independent valuer’s report.

(j) Acquisition Costs

Acquisition costs are dened as costs that vary with, and are primarily related to the acquisition of new

and renewal insurance contracts viz. commission. These costs are expensed in the period in which they

are incurred.

(k) Borrowing Costs

Borrowing costs are charged to the Prot and Loss account in the period in which they are incurred.

(l) Fixed Assets and Depreciation

Fixed assets are stated at cost of acquisition (including incidental expenses relating to acquisition and

installation of assets) and expenses directly attributable to bringing the asset to its working condition

for its intended use, less accumulated depreciation and impairment of assets, if any. Salvaged vehicles,

transferred and registered in the name of the Company are stated at fair market value determined based

on the independent valuer’s report as on the date of capitalization less accumulated depreciation.

Capital works in progress includes assets not ready for the intended use and are carried at cost, comprising

direct cost and related incidental expenses.

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

Depreciable amount for assets is the cost of an asset or other amount substituted for cost, less its estimated

residual value.

Depreciation on tangible xed assets has been provided on the straight-line method as per the useful life

prescribed in Schedule II to the Companies Act, 2013, except in respect of the following categories of assets,

in whose case the life of the assets has been assessed as under, based on technical advice, taking into

account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset,

past history of replacement, etc.

- Information Technology Equipment - 4 years

- Vehicles - 5 years

- Salvaged Vehicles Capitalised - 5 years

Leasehold Property is depreciated over the duration of lease.

Intangible assets are amortised over their estimated useful life on straight line method as follows:

- Computer Softwares - 4 years

The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of

each nancial year and the amortisation period is revised to reect the changed pattern, if any.

Impairment of assets

The carrying values of assets forming part of any cash generating units at Balance Sheet date are reviewed

for impairment at each balance sheet date. If any indication for such impairment exists, the recoverable

amounts of those assets are estimated and impairment loss is recognised, if the carrying amount of those

assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price

and their value in use. Value in use is arrived at by discounting the estimated future cash ows to their

present value based on appropriate discount factor. If at the Balance Sheet date there is any indication

that a previously assessed impairment loss no longer exists, then such loss is reversed and the asset is

restated to that extent.

(m) Finance Leases

Finance leases, which effectively transfer substantially all the risks and benets incidental to ownership of

the leased item to the Company, are capitalised at the lower of the fair value of the asset and present value

of the minimum lease payments at the inception of the lease term and are disclosed as leased assets.

Lease payments are apportioned between the nance charges and the corresponding liability so as to

achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged

to the Revenue Accounts. Leased assets capitalised under nance lease are depreciated on a straight line

basis over the lease term.

(n) Operating Leases

Leases where the lessor effectively retains substantially all the risks and benets of ownership of the

leased asset are classied as operating leases. Operating lease payments are recognised as an expense

on straight line basis in the revenue accounts, as per the lease terms.

(o) Foreign Currency Transactions

Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date

of the transaction.

86 13th Annual Report 2019-20

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

At the Balance Sheet date, monetary items denominated in foreign currencies are converted into rupee

equivalents at the exchange rates prevailing at that date.

All exchange differences arising on settlement/conversion of foreign currency transactions are included in

the Revenue Accounts.

(p) Investments

Investments are made, accounted and classied in accordance with the Insurance Act, 1938, as amended by

Insurance Laws (Amendment) Act, 2015, the Insurance Regulatory and Development Authority (Investment)

Regulations, 2000, Insurance Regulatory and Development Authority of India (Investment) Regulations,

2016 as amended and various other circulars/notications issued by the IRDAI in this context from time

to time.

Investments are recorded at cost, which include brokerage, taxes, if any, stamp duty and excludes broken

period interest.

Investments maturing within twelve months from the Balance Sheet date and investments made with the

specic intention to be disposed off within twelve months from the balance sheet date are classied as

short-term investments.

Investments other than short-term investments are classied as long-term investments.

Pursuant to the provisions of IRDAI Circular No. IRDA/F&A/CIR/CPM/056/03/2016 dated April 4, 2016

and IRDA/F&A/CIR/CPM/010/01/2017 dated January 12, 2017 the Investment made by the Company,

investment income and fair value change account are bifurcated into Policyholders’ and Shareholders’

funds on notional basis.

Policyholders’ fund shall be the sum of a) Outstanding Claims including IBNR(Incurred but not reported)

& IBNER (Incurred but not enough reported), b) Unexpired Risk Reserve (URR), c) Premium deciency, if

any, d) Catastrophe Reserve, if any, and e) Other liabilities net off Other assets. Other liabilities comprise

of Premium received in advance, unallocated premium, Balance due to other Insurance Companies,

Due to others members of the Motor third party pool and Due to Policyholders. Other assets comprises

of outstanding premium, Due from other entities carrying on Insurance business (including reinsurers),

Balance with Terrorism Pool and Balance with Motor third party pool, if any.

Shareholders’ funds comprises of share capital, including reserves and surplus, less accumulated losses,

if any, preliminary expenses and miscellaneous expenditure to the extent not written off or adjusted.

Schedule 8 denotes Investment made out of the Shareholders’ fund and Schedule 8A denotes Investments

made out of the Policyholders’ fund.

All debt securities excluding Additional Tier I Bonds and non-convertible preference shares are considered

as ‘held to maturity’ and accordingly stated at historical cost subject to amortisation of premium or accretion

of discount on constant yield to maturity basis to the extent of policyholders funds in the Revenue Accounts

and to the extent of shareholders’ funds in the Prot and Loss Account over the period of maturity/holding.

All mutual fund investments are valued at net asset value as at Balance Sheet date.

Equity shares actively traded and convertible preference shares as at the Balance Sheet date are stated

at fair value, being the last quoted closing price on the National Stock Exchange (NSE) being selected as

Primary exchange as required by IRDAI Circular No. IRDA/F&I/INV/CIR/213/10/2013 dated October 30,

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

2013. However, in case of any stock not being listed on NSE, the same is valued based on the last quoted

closing price on Bombay Stock Exchange (BSE).

Additional Tier I Bond Investments are fair valued at market yield rates published by rating agency registered

with the Securities and Exchange Board of India (SEBI).

In accordance with the Regulations, any unrealized gains/losses arising due to change in fair value of

mutual fund investments, listed equity shares and Additional Tier I Bonds are accounted in “Fair Value

Change Account” and carried forward in the Balance Sheet and is not available for distribution.

The Company assesses, whether any impairment has occurred on its investments at each Balance Sheet

date. If any such indication exists, then carrying value of such investment is reduced to its recoverable

amount/market value on the Balance Sheet date and the impairment loss is recognised in the Prot and

Loss Account. If at the Balance Sheet date there is any indication that a previously assessed impairment

loss no longer exists then impairment loss, earlier recognised in Prot and loss Account, is reversed in Prot

and loss account and the investment is restated to that extent.

(q) Employee Benets

(i) Short-term employee benets

All employee benets payable within twelve months of rendering the service are classied as short

term employee benets. Benets such as salaries, bonuses, short term compensated absences and

other non-monetary benets are recognised in the period in which the employee renders the related

service. All short term employee benets are accounted on undiscounted basis.

(ii) Long term employee benets

The Company has both dened contribution and dened benet plans, of which some have assets

in special funds or similar securities. The plans are nanced by the Company and in case of some

dened contribution plans, by the Company along with its employees.

Dened contribution plans

These are plans in which the Company pays predened amounts to separate funds and does not

have any legal or informal obligation to pay additional sums. These comprise of contributions to the

employees’ provident fund, family pension fund and superannuation fund. The Company’s payments

to the dened contribution plans are reported as expenses during the period in which the employees

perform the services that the payment covers.

Dened benet plans

Expenses for dened benet gratuity and supplemental payment plans are calculated as at the

Balance Sheet date by independent actuaries using projected unit credit method in a manner that

distributes expenses over the employee’s working life. These commitments are valued at the present

value of expected future payments arrived at after considering the funded status, with consideration

for calculated future salary increases, utilizing a discount rate corresponding to the interest rate

estimated by the actuary, having regard to the interest rate on government bonds with a remaining

term that is almost equivalent to the average balance working period of employees.

The Company recognizes the net obligation of the scheme in Balance Sheet as an asset or liability

in accordance with AS 15 “Employee Benets”. The discount rate used for estimation of liability is

88 13th Annual Report 2019-20

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

based on Government securities yield. Gain or loss arising from change in actuarial assumptions/

experience adjustments is recognised in the Revenue Accounts for the period in which they emerge.

Expected long term rate of return on assets has been determined based on historical experience and

available market information.

(iii) Other long term employee benets

Provision for other long term benets includes accumulated compensated absences that are entitled

to be carried forward for future encashment or availment, at the option of the employer subject to the

rules framed by the Company which are expected to be availed or encashed beyond twelve months

from the Balance Sheet date. The Company’s liability towards these other long term benets are

accrued and provided for on the basis of an actuarial valuation using projected unit credit method

made at the end of the nancial year.

(r) Taxation

Income tax expense comprises current tax (i.e. amount of tax payable on the taxable income for the period

determined in accordance with the Income-tax Act, 1961), and deferred tax charge or credit (reecting

the tax effects of timing differences between the accounting income and taxable income for the period).

Current tax is the amount expected to be paid to the tax authorities after taking credit for allowances

and exemptions in accordance with the Income-tax Act, 1961. The deferred tax charge or credit and the

corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted

or substantively enacted by the Balance Sheet date.

Deferred tax assets are recognised only to the extent there is reasonable certainty that the assets can be

realised in future. However, where there is unabsorbed depreciation or carried forward loss under taxation

laws, deferred tax assets are recognised only to the extent there is virtual certainty backed by convincing

evidence that sufcient future taxable income will be available against which deferred tax assets can be

realised. Deferred tax assets are reviewed as at each Balance Sheet date and written down or written up

to reect the amount that is reasonably or virtually certain to be realised.

In accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered

Accountants of India and in accordance with the provisions of the Income Tax Act, 1961, Minimum Alternate

Tax (‘MAT’) credit is recognised as an asset to the extent there is convincing evidence that the Company will

pay normal income tax in future by way of a credit to the prot and loss account and shown as MAT credit

entitlement.

(s) Terrorism Pool

In accordance with the requirements of IRDAI, the Company, together with other insurance companies,

participates in the Terrorism Pool. This pool is managed by the General Insurance Corporation of India

(“GIC”). Amounts collected as terrorism premium in accordance with the requirements of the Tariff Advisory

Committee (“TAC”) are ceded at 100% of the terrorism premium collected to the Terrorism Pool.

In accordance with the terms of the agreement, GIC retrocedes, to the Company, terrorism premium to the

extent of the Company’s share in the risk, which is recorded as reinsurance accepted. Such reinsurance

accepted is recorded based on quarterly statements received from the GIC. The reinsurance accepted on

account of terrorism pool has been recorded in accordance with the last statement received from GIC.

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

The Company has ensured that it has created liability, to the extent of premium retroceded to the Company,

through reserve for unexpired risks.

(t) Contributions to Solatium Fund

In accordance with the requirements of IRDAI Circular dated March 18, 2003 and based on the decision

made by the General Insurance Council in its meeting held on May 6, 2005, the Company provides for

contribution to Solatium Fund established by the Central Government as a percentage of gross written

premium for all motor policies written during that year, till the year ended March 31, 2010. Further, General

Insurance Council in its meeting held on April 1, 2010 recommended that the contribution should be a

percentage of gross written third party premiums.

(u) Transfer of amounts to Senior Citizen Welfare Fund

In accordance with the requirement of the Notication no G.S.R 380(E), issued by the Ministry of Finance,

dated April 11, 2017 read with IRDAI Circular No. IRDA/F&A/CIR/MISC/173/07/2017 dated July 25, 2017

the Company transfers amounts outstanding for a period of more than 10 years in Unclaimed Amount of

Policyholders to the Senior Citizen Welfare Fund (SCWF) on or before March 1

of each nancial year.

(v) Contribution to Environment Relief Fund

In accordance with the notication no G.S.R 768(E), issued by Ministry of Environment and Forests, dated

November4, 2008, the Company provides for contribution to the Environment Relief Fund established by

the Central Government, an amount equal to the premium received in relation to Public Liability policies

issued by the company, as per the rules specied by Public Liability Insurance Rules 1992.

(w) Segment Reporting

In case of General insurance business, based on the primary segments identied under Insurance Regulatory

and Development Authority (Preparation of Financial Statements and Auditor’s Report of Insurance

Companies) Regulations, 2002 read with AS 17 on “Segment Reporting” specied under Section 133 of

the Companies Act, 2013, the Company has classied and disclosed segment information for Fire, Marine

and Miscellaneous lines of business.

There are no reportable geographical segments, since all business is written in India.

The allocation of revenue and expenses to specic segments is done in the following manner, which is

applied on a consistent basis.

Allocation of Investment Income

Investment income earned on the policyholders’ funds has been allocated on the basis of the average of

reserves for unexpired risks, IBNR, IBNER and outstanding claims of the respective segments.

Operating Expenses relating to Insurance Business

Expenses which are directly attributable and identiable to the business segments shall be allocated to

the respective business segment.

Expenses, which are not directly attributable and identiable to the business segments, shall be apportioned

on the basis of Gross written premium of the respective business segment.

The accounting policies used in segment reporting are same as those used in the preparation of nancial

statements.

90 13th Annual Report 2019-20

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

(x) Earnings Per Share (“EPS”)

The earnings considered in ascertaining the Company’s EPS comprises the net prot after tax. The number

of shares used in computing basic EPS is the weighted average number of shares outstanding during the

year. The number of shares used in computing diluted EPS comprises of weighted average number of shares

considered for deriving basic EPS and also the weighted average number of equity shares which could have

been issued on the conversion of all dilutive potential equity shares.

Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease

the net prot per share from continuing ordinary operations.

(y) Provisions and Contingencies

A provision is recognised when the Company has a present legal obligation as a result of past event and it

is probable that an outow of resources will be required to settle the obligation, in respect of which reliable

estimate can be made. Provisions (excluding retirement benets) are not discounted to its present value

and are determined based on best estimate required to settle the obligation at the Balance Sheet date.

These are reviewed at each Balance Sheet date and adjusted to reect current best estimates.

Contingent losses arising from claims other than insurance claims, litigations, assessments, nes, penalties

etc. are recorded when it is probable that a liability has been incurred and the amount can be reasonably

estimated.

A disclosure for a contingent liability other than those under policies is made when there is a possible

obligation or a present obligation that may, but probably will not require an outow of resources.

When there is a possible obligation or a present obligation in respect of which the likelihood of outow

of resources is remote, no provision or disclosure is made. A Contingent asset is neither recognised nor

disclosed.

(z) Employee Stock Option Plan (“ESOP”)

The Company follows the intrinsic method for computing the compensation cost, for options granted

under the Plan. The difference if any, between the fair value of the share and the grant price, being the

compensation cost is amortized over the vesting period of the options.

(aa) Receipts and Payments Account

(i) Receipts and Payments Account is prepared and reported using the Direct Method, in conformity with

Para 2.2 of the Master Circular on Preparation of Financial Statements - General Insurance Business

dated October 5, 2012, issued by the IRDAI.

(ii) Cash and cash equivalents

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term

balances (with an original maturity of three months or less from the date of acquisition), highly

liquid investments that are readily convertible into known amounts of cash and which are subject to

insignicant risk of changes in value.

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

3. Merger of HDFC ERGO HEALTH INSURANCE LIMITED (Formerly Apollo Munich Health Insurance Company

Limited) (“Transferor Company”) with the Company (“Transferee Company”)

The Board of Directors of the Company, at its meeting held on June 19, 2019, approved entering into Share

Purchase Agreement, by and amongst the Company (“Transferee Company”), Housing Development Finance

Corporation Limited (HDFC Limited) (Holding Company of the Company) , Apollo Munich Health Insurance

Company Limited (Apollo Munich)(now HDFC ERGO Health Insurance Limited) (“Transferor Company), Apollo

Hospitals Enterprise Limited, Apollo Energy Company Limited and Munich Health Holding AG, in connection

with the acquisition of upto 51.2% of the paid-up share capital of Apollo Munich by HDFC Limited and

subsequent merger of Apollo Munich into the Company. The Transferor Company being engaged in Health

Insurance Business.

On receipt of approvals from the Competition Commission of India (CCI), Reserve Bank of India (RBI) and the

Insurance Regulatory and Development Authority of India (IRDAI), HDFC Limited, acquired 51.16% of the paid up

share capital of Apollo Munich Health Insurance Company Limited on January 9, 2020 from its Indian Promoters,

Apollo Hospital Group and few other shareholders. On acquisition, the name of Apollo Munich Health Insurance

Company Limited was changed to HDFC ERGO Health Insurance Limited.

Further, the Board of Directors, at its meeting held on January 15, 2020 approved the Scheme of Amalgamation

(‘the Scheme’) for merger of HEHI with the Company with Appointed Date as March 1, 2020 and consequently,

The Company Scheme Application (CSA) was led with the National Company Law Tribunal, Mumbai Bench (NCLT)

on February 17, 2020.

NCLT at its nal hearing held on September 29, 2020, sanctioned the Scheme under Sections 230 to 232 of

the Companies Act, 2013, for merger of HDFC ERGO Health Insurance Limited with the Company.

Pursuant to the Scheme sanctioned by the NCLT, the entire business undertaking of the Transferor Company

including but not limited to all assets, properties, liabilities, contracts, employees, legal and other proceedings

have been transferred to and vested in the Company on a going concern basis, with effect from March 1, 2020

(the Appointed Date as per the Scheme). The detailed NCLT Order, as uploaded on its website has been submitted

to IRDAI on October 28, 2020. IRDAI has given its nal approval for merger, vide letter dated November 11, 2020

with the Effective Date as November 13, 2020. Consequently, the Scheme has been given effect to in these

nancial statements.

The merger has been accounted under the ‘Pooling of interests’ method as prescribed under Accounting Standard

14 : ‘Accounting for Amalgamations’ (AS 14). Accordingly, the assets, liabilities and reserves of the Transferor

Company as at March 1, 2020 have been taken over at their book values.

The Board of Directors of the Company in its meeting held on May 08, 2020 had approved the Financial

Statements as of March 31, 2020. Since the said nancial statements, adopted by the Board of Directors, were

yet to be adopted by the shareholders of the Company, the Board of Directors have now decided to modify the

nancial statements of the Company for the year ended March 31, 2020 to give effect to the Scheme. Pursuant

to the Scheme sanctioned by the NCLT, and nal approval of IRDAI, the Board of Directors in its meeting held on

November 13, 2020 approved the restated Financial Statements as of March 31, 2020.

92 13th Annual Report 2019-20

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

Details of the summarized values of assets, liabilities and reserves of the Transferor Company, as acquired

pursuant to the Scheme and the treatment of the difference between the net assets acquired and the shares

to be issued to the shareholders of the Transferor Company are as under:

(` ‘000)

Particulars Appointed Date

March 01, 2020

Fixed Assets 413,209

Investments 17,837,220

Cash and bank balances 2,394,776

Advances and other assets 2,135,357

Deferred tax asset (net) 149,806

Total Assets (A) 22,930,368

Borrowings 1,540,000

Current liabilities & Provisions 16,092,521

Others – Fair value change account 591

Total Liabilities (B) 17,633,112

Securities Premium 5,517,832

Debentures Redemption Reserve 40,568

Prot & Loss Account (4,317,847)

Total Reserves (C) 1,240,553

Net assets acquired (A) – (B) – (C) 4,056,703

Less: Equity share capital to be issued 1,053,689

Reserve on Amalgamation 3,003,014

3A. SHARE CAPITAL SUSPENSE:

In terms of the Scheme of Amalgamation, 100 equity shares of ` 10 each of the Company are to be allotted to

the shareholders of the Transferor Company, for every 385 equity shares of ` 10 each held in the Transferor

Company. Accordingly, 105,368,928 Equity Shares of ` 10/- each are to be allotted as fully paid for consideration

other than cash as per terms of merger. Consequently, pending allotment, which would happen on the Record

Date i.e. November 13, 2020, being the Effective Date of the merger as approved by IRDAI, the same has been

reected under Share Capital Suspense in the Balance Sheet.

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

4. CONTINGENT LIABILITIES

(` ‘000)

Sr.

No.

Particulars As at

March 31, 2020

As at

March 31, 2019

1 Partly paid-up investments Nil Nil

2 Underwriting commitments outstanding (in respect of shares and

securities)

Nil Nil

3 Claims, other than those under policies, not acknowledged as debts 1,682 Nil

4 Guarantees given by or on behalf of the Company Nil Nil

5 Statutory demands/liabilities in dispute, not provided for (Refer Note

1 below)

270,442 255,101

6 Reinsurance obligations to the extent not provided for in accounts Nil Nil

7 Others (Refer Note 2 below) 10,000 Nil

Note :

(1) The Company has disputed the demand raised by Income Tax Authorities of ` Nil (Previous year ` 21,824

thousand) and by Service Tax Authorities of ` 270,442 thousand (Previous year ` 233,277 thousand), the

appeals of which are pending before the appropriate Authorities.

(2) Represents amounts payable on cancellation of a service contract, which on the date of approval of these

nancial statements is remote, as the contract with the party has concluded.

(3) The Company has pending litigations arising out of matters relating to Service Tax and has received Order

in Original in respect of a Service Tax matter of ` 1,742,305 thousand (Previous year ` 216,891 thousand).

Based on the expert advice in respect of these matters, the Management does not expect any outow of

economic benets and assessed the likelihood of outow of resources as remote.

5. ENCUMBRANCES ON ASSETS

The assets of the Company are free from encumbrances.

6. COMMITMENTS

There are commitments made and outstanding of ` 110,158 thousand (Previous year ` 127,575 thousand) for

investments.

Estimated amount of contracts remaining to be executed on capital account and not provided for, [net of payments

` 394,334 thousand (Previous year ` 89,478 thousand)] is ` 407,669 thousand (Previous year ` 190,558

thousand).

There are no commitments made and outstanding for loans (Previous year ` Nil).

7. CLAIMS

All claims, net of reinsurance are incurred and paid in India except for Marine Insurance where consignments

are exported from India, Liability Insurance and Overseas Travel Insurance.

(` ‘000)

Particulars For the year ended

March 31, 2020

For the year ended

March 31, 2019

Outside India 269,455 1,690,433

There are no claims that have been settled and remaining unpaid for a period of more than six months as at the

end of the year (Previous year ` Nil).

94 13th Annual Report 2019-20

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

The Ageing of gross claims outstanding (unsettled) is as under:

(` ‘000)

Particulars As at

March 31, 2020

As at

March 31, 2019

More than six months 26,125,781 23,801,619

Others 10,290,035 8,126,349

8. PREMIUM

(a) All premiums net of reinsurance are written and received in India.

(Refer Note 37(b) for treatment of premium received for renewal of Motor Third Party Insurance policies

falling due during the lockdown period as a result of Covid-19 situation, in terms of IRDAI Circular No. IRDAI/

NL/CIR/MOT/079/04/2020 dated April 2, 2020.)

(b) Premium income recognized on “Varying Risk Pattern” is ` Nil (Previous year ` Nil).

9. EXTENT OF RISKS RETAINED AND REINSURED

Extent of risk retained and reinsured with respect to gross written premium is set out below:

For the year ended on March 31, 2020

Particulars Basis Gross

Premium

Retention Cession Retention Cession

(` ‘000) (` ‘000) (` ‘000)

% %

Fire Total sum insured 10,685,887 2,759,047 7,926,840 26 74

Marine Cargo Value at Risk 1,716,618 756,683 959,934 44 56

Marine Hull Total sum insured 230,254 761 229,493 0 100

Miscellaneous

- Motor Total sum insured 33,880,743 25,105,977 8,774,766 74 26

- Workmen’s

Compensation

Value at Risk 200,988 187,774 13,214 93 7

- Public/Product Liability Value at Risk 44,203 20,577 23,626 47 53

- Engineering Total sum insured 1,998,838 830,044 1,168,795 42 58

- Aviation Value at Risk 127,101 3,098 124,003 2 98

- Personal Accident Value at Risk 6,592,572 4,459,852 2,132,720 68 32

- Health Insurance Value at Risk 16,031,212 9,592,574 6,438,638 60 40

- Other Liability /

Specialty

Value at Risk 2,541,731 971,703 1,570,028 38 62

- Others Value at Risk 23,550,819 4,909,909 18,640,910 21 79

The above excludes Excess of Loss cover reinsurance premium of ` 929,340 thousand for the year ended on

March 31, 2020.

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

For the year ended on March 31, 2019

Particulars Basis Gross

Premium

Retention Cession Retention Cession

(` ‘000) (` ‘000) (` ‘000)

% %

Fire Total sum insured 7,930,484 1,444,484 6,486,000 18 82

Marine Cargo Value at Risk 1,548,746 678,916 869,829 44 56

Marine Hull Total sum insured 377,703 1,396 376,308 0 100

Miscellaneous

- Motor Total sum insured 30,599,856 23,656,604 6,943,253 77 23

- Workmen’s

Compensation

Value at Risk 193,318 162,599 30,719 84 16

- Public/Product Liability Value at Risk 47,790 24,492 23,298 51 49

- Engineering Total sum insured 1,572,751 457,739 1,115,013 29 71

- Aviation Value at Risk 278,010 (94) 278,104 (0) 100

- Personal Accident Value at Risk 6,964,561 4,921,195 2,043,366 71 29

- Health Insurance Value at Risk 12,787,208 7,661,039 5,126,169 60 40

- Other Liability / Specialty Value at Risk 2,218,565 825,856 1,392,709 37 63

- Others Value at Risk 22,699,009 4,616,030 18,082,980 20 80

The above excludes Excess of Loss cover reinsurance premium of ` 722,382 thousand for the year ended on

March 31, 2019.

10. INVESTMENTS

Details of contracts for purchase / sale of securities during the year, where deliveries are pending at the end of

the year and credit/debit in Company’s Demat Account has been done subsequent to the year end are as under:

(` ‘000)

Particulars Nature Type of Security No. of Units /

As at

March 31, 2020

As at

March 31, 2019

Axis Liquid Fund Direct Growth Purchase Mutual Fund 6,828.648 15,000 —

Jhelum Investment Fund Purchase Alternate

Investment Fund

3.875 388 —

IL&FS Transportation Networks Ltd Sale Equity Shares 300,000 — 1,664

Total 15,388 1,664

Investments made are in accordance with the Insurance Act, 1938, as amended by Insurance Laws (Amendment)

Act, 2015, the Insurance Regulatory and Development Authority (Investment) Regulations, 2000, Insurance

Regulatory and Development Authority of India (Investment) Regulations, 2016 as amended and various other

circulars / notications issued by the IRDAI in this context from time to time.

96 13th Annual Report 2019-20

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

The Company has written-off ` 100,000 thousand, being the book value of its investments in non-convertible

debentures (Additional Tier 1) in Yes Bank Limited, as part of the restructuring process initiated by the

Reserve Bank of India under Section 45 of the Banking Regulation Act, 1949 and in terms of directions issued

under Para 3 of letter No. YBL/CS/2019-20/186(2) dated March 14, 2020, by the Administrator of Yes Bank

Limited.

The Company has non-performing investments amounting to ` 250,000 thousand (including Transferor Company’s

investment amounting ` 100,000 thousand) in Dewan Housing Finance Corporation Limited (DHFL). DHFL has

defaulted in the payment of interest and redemption proceeds and accordingly, based on IRDAI Guidelines, the

Investment has been classied as non-performing. The Company had made provision amounting ` 125,000

thousand in the nancial statements and no interest income has been accrued thereon during the year, in terms

of the provisions of point 13 of Para 3.7 of the Master Circular on IRDAI (Investment) Regulations, 2016.

Pursuant to the Scheme, the Company has taken over investments of Transferor Company, on which necessary

provisions were made by the Transferor Company for the following exposures:

(a) Reliance Capital Limited (RCL): Impairment provision of ` 29,999 thousand on exposure of ` 199,979

thousand in its non-convertible debentures, as RCL has defaulted in its obligation towards payment of

interest.

(b) Infrastructure Leasing & Financial Services (IL&FS) group: Impairment provision of ` 599,239 thousand,

being exposure in its non-convertible Debentures.

Correspondingly, during the previous year, the Company had non-performing investments amounting to

` 1,532,731 thousand in Infrastructure Leasing & Financial Services Limited, IL&FS Financial Services Limited,

IL&FS Transportation Networks Limited, for which the Company had made 100% provision in the nancial

statements. In terms of point 13 of Para 3.7 of the Master Circular on IRDAI (Investment) Regulations, 2016, no

interest income had been accrued on these investments in the current year as well as the previous year.

Historical cost of investments which have been valued on a market value basis:

Mutual Funds – ` 7,414,772 thousand (Previous year ` 2,191,425 thousand)

Equity Shares – ` 3,169,005 thousand (Previous year ` 4,035,529 thousand)

(` ’000)

Particulars As at

March 31, 2020

As at

March 31, 2019

Aggregate market value of the Investments other than Mutual Fund and

Equity Shares

129,928,435 85,842,204

Aggregate amortized cost / cost of the Investments other than Mutual Fund

and Equity Shares

125,940,220 85,087,894

11. MANAGERIAL REMUNERATION

In terms of the disclosure requirements of Para 9 of IRDAI Corporate Governance Guidelines for Insurers in

India, 2016, the elements of remuneration paid to Managing Director and Chief Executive Ofcer (MD & CEO),

the Executive Directors, all other directors and Key Management Persons are as follows:

(a) The Managing Director and Chief Executive Ofcer (MD & CEO) and the Executive Directors are remunerated

in terms of the approval granted by IRDAI.

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

Details of their remuneration included in employee remuneration and welfare benets are as follows:

(` ‘000)

Particulars For the year ended

March 31, 2020

For the year ended

March 31, 2019

Salary, perquisites and bonus 130,026 124,573

Contribution to Provident Fund 3,941 3,778

Total 133,967 128,351

Above includes remuneration paid to Mr. Anuj Tyagi, as Executive Director of the Company, for the period

April 01, 2019 to January 08, 2020 and as MD & CEO of the Transferor Company for the period March 01,

2020 to March 31, 2020.

Out of the above ` 15,000 thousand (Previous year ` 15,000 thousand) remuneration for each Director

(proportionate in case of Mr. Anuj Tyagi for period April 01, 2019 till January 08, 2020 and March 01, 2020

to March 31, 2020) has been charged to Revenue Accounts and balance ` 91,467 thousand (Previous year

` 83,351 thousand) has been transferred to Prot and Loss Account.

(b) During the year, the Company has paid an amount of ` 4,000 thousand (Previous year ` 3,753 thousand)

as Commission to Independent Directors and an amount of ` 14,000 thousand (Previous year ` 12,600

thousand) as fees to Non-Executive Directors for attending Board / Committee meetings.

Directors, as dened under IRDAI Corporate Governance Guidelines for Insurers in India, 2016, are as

follows :

(` ‘000)

Particulars For the year ended

March 31, 2020

For the year ended

March 31, 2019

Salary, perquisites and bonus 144,470 97,563

Contribution to Provident Fund 3,599 2,397

Total 148,069 99,960

In addition to the above, Wholetime Directors and KMPs are entitled to ESOPs under the Company’s ESOP

Scheme.

Expenses towards gratuity funding and leave encashment provision are determined actuarially on an overall

Company basis annually and accordingly have not been considered in the above information.

12. SECTOR WISE BUSINESS BASED ON GROSS DIRECT PREMIUM INCOME (GDPI)

Business Sector For the year ended March 31, 2020 For the year ended March 31, 2019

GDPI (` ‘000)

% of GDPI

GDPI (` ‘000)

% of GDPI

Rural 28,720,875 30 26,665,185 31

Urban 67,574,999 70 59,463,322 69

Total 96,295,873 100 86,128,508 100

Social Sector For the year ended

March 31, 2020

For the year ended

March 31, 2019

Number of lives 7,356,537 3,740,134

GDPI (` ‘000)

26,707,213 26,426,872

98 13th Annual Report 2019-20

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

13. REINSURANCE REGULATIONS

As per Para 6 of Insurance Regulatory and Development Authority of India (Reinsurance) Regulations, 2018, prior

approval from IRDAI is required in case of re-insurance placements with Cross Border Reinsurers (CBRs) by the

cedants transacting other than life insurance business, which shall be subject to the following overall cession

limits on the overall reinsurance premium ceded outside India during a nancial year.

Rating of the CBR as per Standard & Poor or equivalent Maximum overall cession

limits allowed per CBR

BBB & BBB+ of Standard & Poor 10%

Greater than BBB+ and upto & including A+ of Standard & Poor 15%

Greater than A+ of Standard & Poor 20%

In terms of above Reinsurance Regulations, the Company has submitted details of its reinsurance programmes

to the IRDAI, covering reinsurance wise placement for such treaties.

14. ASSETS TAKEN ON LEASE

Operating lease commitments – Premises, Furniture and Fittings:

The Company takes premises; both commercial and residential on lease (includes furniture taken on lease). The

minimum lease payments to be made in future towards non-cancellable lease agreements are as follows:

(`‘000)

Particulars As at

March 31, 2020

As at

March 31, 2019

Not later than one year 122,802 176,058

Later than one year but not later than ve years 68,368 43,401

Later than ve years — —

The aggregate operating lease rental, charged to the Revenue Accounts in the current year is ` 279,376 thousand

(Previous year ` 241,893 thousand).

The lease terms do not contain any exceptional / restrictive covenants nor are there any options given to the

Company to renew the lease or purchase the asset.

15. TAXATION

Accounting Standard (AS) 22 – ‘Accounting for Taxes on Income’, requires the Company to accrue taxes on income

in the same period as the revenue and expenses to which they relate. As the taxable income is different from the

reported income due to timing differences, there arises a potential Deferred Tax Asset or Deferred Tax Liability,

as the case may be. The components of the Company’s Deferred Tax Assets and Liabilities are tabulated below.

(` in ‘000)

Particulars As at

March 31, 2020

As at

March 31, 2019

Deferred Tax Assets:

Section 43B & 40(a) of Income Tax Act 91,602 36,330

Rule 6 E of the Income-tax rules, 1962 (Reserve for unexpired risk) — 107

Amalgamation Expenses 56,944 45,661

Provision for diminution in value of Investment and Doubtful Debts 599,033 553,939

Total 747,579 636,036

Deferred Tax Liabilities:

Depreciation 21,303 118,397

Total 21,303 118,397

Deferred Tax Asset / (Liabilities) (Net) 726,276 517,639

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

The Company has chosen to exercise the option of lower tax rate of 25.168% (inclusive of surcharge and cess)

under Section 115BAA of the Income Tax Act, 1961, as introduced by the Finance Act, 2019. The Company has

taken the impact of this option and re-measured its deferred tax assets for the year ended March 31, 2020

and written off the MAT Credit entitlement taken over on merger of the Transferor Company as no longer

recoverable.

The Transferor Company had recognised Deferred Tax Assets of ` 149,806 thousand, which mainly comprised

of unabsorbed deprecation and provision for diminution in the value of investment

Deferred Tax on unabsorbed depreciation or carried forward loss under taxation laws are recognized only to

the extent there is virtual certainty backed by convincing evidence that sufcient future taxable income will be

available against which Deferred Tax Asset can be realized.

16. EMPLOYEE STOCK OPTION PLAN (ESOP)

The Company had introduced an Employee Stock Option Plan 2009 (“ESOP 2009”) in nancial year 2009-10.

ESOP 2009 provides that eligible employees are granted options to acquire equity shares of the Company that

vest in graded manner. The vested options may be exercised within a specied period.

Under ESOP 2009, during the year 200,000 options (Previous year 1,055,000 options) were granted at an

exercise price of ` 364.40 per option (Previous year ` 257.00 per option). The options will vest over a period of

two to four years from the date of grant as given below and are exercisable over a period of ve years from the

respective dates of vesting. Accordingly, during the year, Nil options (Previous year 50,000 options) were vested

out of Tranche VI, 581,500 options (Previous year 190,750 options) were vested out of Tranche VII, 10,000

options (Previous year 10,000 options) were vested out of Tranche VIII and 503,750 options (Previous year Nil

options) were vested out of Tranche IX.

Vesting (%) Vesting Period

25% 2 years after date of grant

25% 3 years after date of grant

50% 4 years after date of grant

The Transferor Company had in force an “Employee Stock Option Plan – 2011”, having tranches viz. HI Tranche

I, HI Tranche II, HI Tranche III, HI Tranche IV, HI Tranche V & HI Tranche VI. Pursuant to the Scheme, the stock

options granted under the said Plan are transferred from Transferor Company to Transferee Company, taking into

account the Share Exchange Ratio and on the same terms and conditions as provided in the Scheme. As on the

date of merger, there are no options outstanding of the Transferor Company under HI Tranche I & II.

These options are exercisable over a period of ve years from the dates of vesting. For HI Tranche III & VI of the

Transferor Company, options will vest in ratio of 25:25:50 starting from the end of two years from the date of

grant, and for HI Tranche IV & V of the Transferor Company, options will vest in ratio of 20:20:20:40 starting from

the end of two years from the date of grant.

100 13th Annual Report 2019-20

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

Movement in the options :

(No. of Options)

Particulars Tranche XIII Tranche XII Tranche XI Tranche X

As at

March 31,

2020

As at

March 31,

2019

As at

March 31,

2020

As at

March 31,

2019

As at

March 31,

2020

As at

March 31,

2019

As at

March 31,

2020

As at

March 31,

2019

Outstanding at the Beginning

of the year

— — — — 100,000 — 915,000 —

Granted during the year 100,000 — 100,000 — — 100,000 — 955,000

Exercised during the year — — — — — — — —

Lapsed during the year — — — — — — 45,000 40,000

Outstanding at the end of the

year

100,000 — 100,000 — 100,000 100,000 870,000 915,000

Unvested at the end of the

year

100,000 — 100,000 — 100,000 100,000 870,000 915,000

Vested at the end of the year — — — — — — — —

Weighted average price per

option

364.40 — 364.40 — 257 257 257 257

(No. of Options)

Particulars Tranche IX Tranche VIII Tranche VII Tranche VI

As at

March 31,

2020

As at

March 31,

2019

As at

March 31,

2020

As at

March 31,

2019

As at

March 31,

2020

As at

March 31,

2019

As at

March 31,

2020

As at

March 31,

2019

Outstanding at the

Beginning of the year

2,015,000 2,015,000 30,000 40,000 748,500 940,250 — 50,000

Granted during the year — — — — — — — —

Exercise during the year 142,500 — 10,000 10,000 198,500 191,750 — 50,000

Lapsed during the year — — — — — — — —

Outstanding at the end of

the year

1,872,500 2,015,000 20,000 30,000 550,000 748,500 — —

Unvested at the end of the

year

1,511,250 2,015,000 20,000 30,000 — 581,500 — —

Vested at the end of the

year

361,250 — — — 550,000 167,000 — —

Weighted average price per

option

151 151 91 91 80 80 80 80

101

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

(No. of Options)

Particulars Tranche V Tranche IV Tranche III

As at

March 31,

2020

As at

March 31,

2019

As at

March 31,

2020

As at

March 31,

2019

As at

March 31,

2020

As at

March 31,

2019

Outstanding at the Beginning of the year 91,000 108,500 135,500 189,000 18,000 38,000

Granted during the year — — — — — —

Exercise during the year 15,000 17,500 37,000 53,500 5,000 20,000

Lapsed during the year — — — — — —

Outstanding at the end of the year 76,000 91,000 98,500 135,500 13,000 18,000

Unvested at the end of the year — — — — — —

Vested at the end of the year 76,000 91,000 98,500 135,500 13,000 18,000

Weighted average price per option 62.5 62.5 50 50 50 50

(No. of Options)

Particulars Tranche II Tranche I

As at

March 31, 2020

As at

March 31, 2019

As at

March 31, 2020

As at

March 31, 2019

Outstanding at the Beginning of the year — — 25,000 32,500

Granted during the year — — — —

Exercise during the year — — 12,000 7,500

Lapsed during the year — — — —

Outstanding at the end of the year — — 13,000 25,000

Unvested at the end of the year — — — —

Vested at the end of the year — — 13,000 25,000

Weighted average price per option 10 10 10 10

(No. of Options)

Particulars HI Tranche VI HI Tranche V HI Tranche IV HI Tranche III

As at March

31, 2020

As at March

31, 2019

As at March

31, 2020

As at March

31, 2019

As at March

31, 2020

As at March

31, 2019

As at March

31, 2020

As at March

31, 2019

Transfer on Merger 383,134 — 162,349 — 91,429 — 35,066 —

Granted during the year — — — — — — — —

Exercised during the year — — — — — — — —

Lapsed during the year — — — — — — — —

Outstanding at the end of the

year

383,134 — 162,349 — 91,429 — 35,066 —

Unvested at the end of the year 383,134 — 162,349 — 91,429 — 35,066 —

Vested at the end of the year — — — — — — — —

Weighted average price per

option

364.60 — 281.05 — 75.81 — 75.81 —

102 13th Annual Report 2019-20

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

Method used for accounting

The Company has adopted intrinsic value method for computing the compensation cost for the Options granted.

Since the exercise price is not less than the intrinsic value of shares on the date of grant, value of options is

` Nil (Previous year ` Nil) and accordingly, no compensation cost is recognized in the books.

Had the Company followed the fair value method for valuing its options for the year, the charge to the Revenue

Accounts and Prot and Loss Account would have been higher by ` 50,101 thousand (Previous year ` 61,380

thousand) and prot after tax would have been lower by ` 38,046 thousand (Previous year ` 50,196 thousand).

Consequently, the Company’s basic and diluted earnings per share would have been ` 5.26 and ` 5.24 respectively.

Fair Value Methodology:

The fair value of options on date of grant has been estimated using Black-Scholes model. The key assumptions

used in Black-Scholes model for calculating fair value under ESOP 2009 Tranche I, Tranche II, Tranche III, Tranche

IV, Tranche V, Tranche VI, Tranche VII, Tranche VIII, Tranche IX, Tranche X, Tranche XI, Tranche XII and Tranche

XIII as on the date of grant viz. February 10, 2010, May 25, 2010, July 25, 2011, April 24, 2012, April 30, 2013,

April 25, 2014, March 16, 2015, April 21, 2016, April 28, 2017 , April 16, 2018, August 20, 2018, February 06,

2020 and February 20, 2020, and Transferor Company’s ESOP Plan HI Tranche III, HI Tranche IV, HI Tranche V

and HI Tranche VI as on date of grant viz October 01, 2017, February 09, 2018, August 07, 2019 and February

10, 2020 are as follows:

Particulars Risk Free Interest rate Expected Life Expected Volatility* Expected dividend yield

Tranche XIII 5.98%-6.27% 4-6 years 14% Nil

Tranche XII 6.07%-6.34% 4-6 years 14% Nil

Tranche XI 7.83%-7.96% 4-6 years 10% Nil

Tranche X 7.33%-7.58% 4-6 years 10% Nil

Tranche IX 6.90%-6.95% 4-6 years 12% Nil

Tranche VIII 7.41%-7.62% 4-6 years 18% Nil

Tranche VII 7.82%-7.86% 4-6 years 13% Nil

Tranche VI 8.75%-8.93% 4-6 years 17% Nil

Tranche V 7.64%-7.60% 4-6 years 13% Nil

Tranche IV 8.22%-8.49% 4-6 years 20% Nil

Tranche III 8.22%-8.31% 4-6 years 17% Nil

Tranche II 6.92%-7.42% 4-6 years 22% Nil

Tranche I 7.29%-7.72% 4-6 years 32% Nil

HI Tranche VI 5.95%-6.28% 4-6 years 14% Nil

HI Tranche V 6.10%-6.48% 4-7 years 13% Nil

HI Tranche IV 7.22%-7.59% 4-7 years 9% Nil

HI Tranche III 6.58%-6.75% 4-6 years 10% Nil

*Volatility of BSE Sensex for one year has been considered.

103

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

Particulars Fair Value Method

For the year ended

March 31, 2020

For the year ended

March 31, 2019

Net Prot after Tax (` ‘000)

3,231,372 3,779,680

B Less: Preference dividend — —

Weighted Average number of Equity Shares of ` 10/- each

(Basic) (in ‘000)

614,623 605,364

Weighted Average number of Equity Shares of ` 10/- each

(Diluted) (in ‘000)

616,759 606,975

Basic Earnings Per Share (`)

5.26 6.24

Diluted Earnings Per Share (`)

5.24 6.23

Information in respect of Options outstanding

Particulars

Exercise Price (`)

No. of Options Weighted Average

remaining life

Tranche XIII As at March 31, 2020 364.40 100,000 98 months

As at March 31, 2019 — — —

Tranche XII As at March 31, 2020 364.40 100,000 97 months

As at March 31, 2019 — — —

Tranche XI As at March 31, 2020 257 100,000 80 months

As at March 31, 2019 257 100,000 92 months

Tranche X As at March 31, 2020 257 870,000 76 months

As at March 31, 2019 257 915,000 88 months

Tranche IX As at March 31, 2020 151 1,872,500 64 months

As at March 31, 2019 151 2,015,000 76 months

Tranche VIII As at March 31, 2020 91 20,000 52 months

As at March 31, 2019 91 30,000 64 months

Tranche VII As at March 31, 2020 80 550,000 38 months

As at March 31, 2019 80 748,500 50 months

Tranche VI As at March 31, 2020 80 — 28 months

As at March 31, 2019 80 — 40 months

Tranche V As at March 31, 2020 62.5 76,000 16 months

As at March 31, 2019 62.5 91,000 28 months

Tranche IV As at March 31, 2020 50 98,500 4 months

As at March 31, 2019 50 135,500 16 months

Tranche III As at March 31, 2020 50 13,000 2 months

As at March 31, 2019 50 18,000 7 months

Tranche II As at March 31, 2020 10 — 29 months

As at March 31, 2019 10 — 41 months

Tranche I As at March 31, 2020 10 13,000 26 months

As at March 31, 2019 10 25,000 38 months

HI Tranche VI As at March 31, 2020 364.60 383,134 104 months

As at March 31, 2019 — — —

HI Tranche V

As at March 31, 2020 281.05 162,349 98 months

As at March 31, 2019 — — —

HI Tranche IV As at March 31, 2020 75.81 91,429 92 months

As at March 31, 2019 — — —

HI Tranche III As at March 31, 2020 75.81 35,066 69 months

As at March 31, 2019 — — —

104 13th Annual Report 2019-20

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

17. SEGMENT REPORTING

The statement on segment reporting is included in Annexure 1.

18. ACCOUNTING RATIOS

The statement on accounting ratios is provided in Annexure 2.

19. EMPLOYEE BENEFITS

(a) Dened Contribution Plan:

(`‘000)

Expenses on dened contribution plan For the year ended

March 31,2020

For the year ended

March 31,2019

Contribution to Staff Provident fund 140,676 104,384

Contribution to Superannuation fund Nil 904

Contribution to National Pension Scheme 14,691 12,447

Total 155,367 117,735

(b) Dened Benet Plan – Gratuity :

Disclosures as per AS-15 (Revised) “Employee Benets” for the year ended on March 31, 2020:

(`‘000)

Sl.

No.

Particulars March 31, 2020 March 31, 2019

I. Assumptions

Discount Rate 5.45%-6.84% 7.54%

Rate of increase in compensation levels 7.00%-8.00% 7.00%

Rate of Return on Plan Assets p.a. 5.45%-6.84% 7.54%

II. Table Showing Change in Benet Obligation

Net liability as per books (A) 276,106 234,391

Fair value of Assets at the beginning of the year (B) Nil Nil

Shortfall/(Excess) in opening liability determined as per actuarial

valuation (C)

Nil Nil

Opening net Liability as per actuarial valuation (A)+(B)+(C) 276,106 234,391

Interest Cost for the year 21,288 18,329

Service Cost for the year 53,144 43,750

Liability taken over from Transferor Company 103,043 Nil

Liability Transferred Out Nil Nil

Benets paid during the year (31,269) (49,949)

Actuarial (Gain)/Loss on obligations 29,984 29,585

Liabilities assumed on acquisition / settled Nil Nil

Plan Benet Obligation at the end of the year 452,296 276,106

III. Tables of Fair value of Plan Assets

Fair Value of Plan Assets at the beginning of the year 277,036 229,315

Expected Return on Plan Assets for the year 21,362 17,933

105

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

(`‘000)

Sl.

No.

Particulars March 31, 2020 March 31, 2019

Contributions during the year 82,951 81,545

Assets taken over from Transferor Company 74,878 Nil

Benets Paid during the year (31,269) (49,949)

Actuarial Gain/(Loss) on Plan Assets 8,608 (1,808)

Fair Value of Plan Assets at the end of the year 433,566 277,036

IV. The Amounts to be recognised in the Balance Sheet

Present Value of Obligation (452,296) (276,106)

Fair Value of Plan Assets 433,566 277,036

Asset/(Liability) recognised in Balance Sheet (18,730) 930

V. Amounts to be recognised in the Revenue Accounts (Net Periodic

Cost)

Current Service Cost 53,144 43,750

Interest Cost (74) 397

Expected Return on Plan Assets Nil Nil

Net actuarial (Gain) / Loss recognised in the year 21,376 31,393

Actuarial determined charge for the year (A) 74,446 75,540

Shortfall/(Excess) (B) Nil Nil

Total Charge as per books (A+B) 74,446 75,540

(expense is disclosed in the line item – Employees’ remuneration

and welfare benet)

VI. Movements in the liability recognised in the Balance Sheet:

Net Liability as per books (A) (930) 5,075

Shortfall/(Excess) in opening liability determined as per actuarial

valuation (B)

Nil Nil

Opening net liability(A+B) (930) 5,075

Expense as above 74,446 75,540

Net Liability / (Asset) Transfer In 28,165 Nil

Net (Liability) / Asset Transfer Out Nil Nil

Contribution paid (82,951) (81,545)

Closing Net (Asset)/Liability 18,730 (930)

VII. Actual Return on Plan Assets

Expected return on Plan Assets 21,362 17,932

Actuarial Gain/(Loss) on Plan Assets 8,608 (1,808)

Actual return on Plan assets 29,970 16,124

106 13th Annual Report 2019-20

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

Experience adjustments

(` ‘000)

Particulars March 31,

2020

March 31,

2019

March 31,

2018

March 31,

2017

March 31,

2016

Dened Benet Obligation 452,296 276,106 234,391 190,652 18,672

Plan Assets 433,566 277,036 229,315 171,907 —

Surplus/(Decit) (18,730) 930 (5,076) (18,745) (18,672)

Experience Adjustment on Plan Liabilities 4,214 (21,701) (20,613) (5,019) (875)

Experience Adjustment on Plan Assets 8,608 (1,808) (4,446) (419) —

The Transferee Company’s gratuity funds are managed by HDFC Life Insurance Company Limited. Secure Managed

Fund constitutes 98% (Previous year 93%) and Liquid Fund constitutes 2% (Previous year 7%) of the total fund

balance.

Investment Pattern of Transferee Company’s Gratuity Funds in HDFC Life Insurance Company Limited:

Particulars Invested as on March 31, 2020 Invested as on March 31, 2019

Secure

Managed Fund

Liquid Fund Secure

Managed Fund

Liquid Fund

Government Securities 46% — 34% —

Debentures/Bonds 49% — 60% —

Deposits, Money Market Securities and Net

Current Assets

5% 100% 6% 100%

Total 100% 100% 100% 100%

Transferor Company’s gratuity funds are managed by Kotak Mahindra Life Insurance Company Limited (“Kotak

Life”) and Life Insurance Corporation (LIC) of India. Gratuity fund invested with Kotak Life ` 94,442 thousand

and LIC ` 124 thousand as on March 31, 2020.

Investment Pattern of Transferor Company ’s Gratuity Funds in Kotak Life:

Particulars Invested as on March 31, 2020

Balanced Fund Bond Fund

Equity 45% —

Government Securities 18% 33%

Debentures/Bonds 26% 60%

Money Market Securities and Net Current Assets 12% 7%

Total 100% 100%

Balanced Fund constitutes 31% and Bond Fund constitutes 69% of the total fund balance.

The estimates of future salary increases, considered in actuarial valuation, take into account ination, seniority,

promotion and other relevant factors such as supply and demand in the employment market.

The contribution expected to be made by the Company during the nancial year 2020-21, amounts to ` 105,981

thousand (Previous year ` 50,691 thousand).

107

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

20. RELATED PARTY DISCLOSURE

As per the Accounting Standard (AS) 18 on ‘Related Party Disclosures’, the related parties of the Company are

as follows:

(a) Names of the related parties and description of relationship:

Holding Company

Housing Development Finance Corporation Limited (HDFC Limited)

Fellow subsidiaries (with whom company has transactions)

HDFC Asset Management Company Limited

HDFC Life Insurance Company Limited

GRUH Finance Limited (upto August 30, 2019)

HDFC Sales Private Limited

HDFC Property Ventures Limited

HDFC Credila Financial Services Private Limited

HDFC Education and Development Services Private Limited

HDFC Capital Advisors Limited

HDFC Pension Management Company Limited

Entities over which Holding Company has control

HDFC Investment Trust

HDFC Investment Trust II

H T Parekh Foundation

Investing Party and its group companies

ERGO International AG

Munich Re

Key Management Personnel and Relatives of Key Management Personnel

Mr. Ritesh Kumar, Managing Director and CEO

Ms. Reena Kumar, Spouse of Ritesh Kumar (MD & CEO)

Ms. Harshita Agarwal, Daughter of Ritesh Kumar (MD & CEO)

Ms. Saloni Agarwal, Daughter of Ritesh Kumar (MD & CEO)

Mr. Amish Kumar Agarwal, Brother of Ritesh Kumar (MD & CEO)

Mr. Mukesh Kumar, Executive Director (upto May 30, 2018)

Mr. Anuj Tyagi, Executive Director & Chief Business Ofcer

(For the period April 01, 2019 till January 8, 2020 and MD & CEO of the Transferor Company from March

1, 2020 to March 31, 2020)

Mr. Samir H. Shah, Executive Director & CFO

Mr. Sanjay H. Shah, Brother of Samir H. Shah (ED & CFO)

108 13th Annual Report 2019-20

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

(b) Details of Transactions:

(` ‘000)

Particulars Holding Company Fellow Subsidiaries# Investing Party and its

group companies

Key Managerial

Personnel (including

relatives)

Year ended

March 31,

2020

Year ended

March 31,

2019

Year ended

March 31,

2020

Year ended

March 31,

2019

Year ended

March 31,

2020

Year ended

March 31,

2019

Year ended

March 31,

2020

Year ended

March 31,

2019

INCOME

Interest, Dividend and

Rent-Gross

393,385 281,215 6,330 11,700 — — — —

Premium from direct

business written - net of

GST

146,072 104,009 76,485 64,009 (3) — 226 295

Commission received on

Reinsurance ceded

— — — — 830,520 428,571 — —

Claims on Reinsurance

ceded

— — — — 1,109,020 1,939,053 — —

Other Income 269 284 — — 37,439 42,641 — —

Total 539,726 385,509 82,815 75,709 1,976,976 2,410,265 226 295

EXPENSES

Rent, rates and taxes 66,702 66,702 — — — — — —

Name Usage Fees 377,556 348,872 — — — — — —

Electricity expenses 377 1,093 — — — — — —

Claims paid direct 5 6 1,766 70,502 — — — —

Commission paid —

1 607,447 502,117 — — — —

Employees’ remuneration

and welfare benets

— — — — — — 133,967 128,351

Premium on Reinsurance

ceded

— — — — 4,681,511 2,275,117 — —

Interest on Debentures — — — — 132,312 129,200 — —

Dividend — 687,806 — — — 657,455 — —

Insurance Premium Paid — — — 12,112 — — — —

Repairs (Ofce

Maintenance)

1,582 3,866 — — — — — —

Others 10 859 — — — — — —

Total 446,232 1,109,205 609,213 584,731 4,813,823 3,061,772 133,967 128,351

ASSETS

Transactions during the

year

Investment purchased

during the year

200,000 — 1,207,525 — — — — —

Investment sold during

the year

— — 932,447 — — — — —

109

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

(` ‘000)

Particulars Holding Company Fellow Subsidiaries# Investing Party and its

group companies

Key Managerial

Personnel (including

relatives)

Year ended

March 31,

2020

Year ended

March 31,

2019

Year ended

March 31,

2020

Year ended

March 31,

2019

Year ended

March 31,

2020

Year ended

March 31,

2019

Year ended

March 31,

2020

Year ended

March 31,

2019

Account Balances

Investments 5,295,620 3,488,034 — 121,072 — — — —

Income accrued on

investments

352,858 219,283 — 224 — — — —

Other Receivable 26 — — — 9,759 10,897 — —

LIABILITIES

Account Balances

Share Capital 3,058,417 3,056,917 — — 2,922,023 2,922,023 — —

Securities Premium 4,940,894 4,940,894 — — 3,260,251 3,260,251 — —

Debentures — — — — 2,100,000 1,700,000 — —

Balance due to other

insurance companies

— — — — 3,014,006 696,468 — —

Due to holding company 97,576 69,740 — — — — — —

Interest Payable on

Debentures

— — — — 78,367 47,854 — —

Unallocated premium 14,406 8,881 24,831 18,686 125 — — —

Agents’ Balances — —

38,431 56,620 — — — —

# includes transaction with HDFC Investment Trust, HDFC Investment Trust II & H T Parekh Foundation (Entity

over which control is exercised by the Holding Company)

Transactions included in (b) above which are in excess of 10% of the total related transactions of the same

type are given below for the Financial Year 2019-20:

(` ‘000)

Particulars Munich Re ERGO

International AG

HDFC AMC Ltd HDFC Life HDFC Sales

Private Limited

INCOME

Premium from direct business

written - net of GST

(3) — 14,544 9,328 47,108

Commission received on

Reinsurance ceded

830,520 — — — —

Claims on Reinsurance ceded 1,109,020 — — — —

Other Income — 37,439 — — —

Total 1,939,537 37,439 14,544 9,328 47,108

110 13th Annual Report 2019-20

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

(` ‘000)

Particulars Munich Re ERGO

International AG

HDFC AMC Ltd HDFC Life HDFC Sales

Private Limited

EXPENSES

Claims paid direct — — — 1,016 750

Premium on Reinsurance ceded 4,681,511 — — — —

Interest on Debentures 2,846 129,466 — — —

Dividend — — — — —

Commission Paid — — — — 607,447

Deputation Fees Paid — — — — —

Total 4,684,357 129,466 — 1,016 608,197

ASSETS

Transactions during the year

Investment purchased during

the year

— — 656,840 550,685 —

Investment sold during the year — — 657,197 275,250 —

Account Balances

Other Receivable 399 9,360 — — —

Interest accrued on investments — — — — —

LIABILITIES

Account Balances

Share Capital — 2,922,023 — — —

Securities Premium — 3,260,251 — — —

Debentures 400,000 1,700,000 — — —

Balance due to other insurance

companies

3,014,006 — — — —

Interest Payable on Debentures 30,930 47,436 — — —

Unallocated Premium 125 — 18,291 263 4,162

Agent Balances — — — — 38,431

111

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

Transactions included in (b) above which are in excess of 10% of the total related transactions of the same

type are given below for the Financial Year 2019-20:

(` ‘000)

Particulars Ritesh Kumar

(Incl. Relatives)

Anuj Tyagi (Incl.

Relatives)

Samir H. Shah

(Incl. Relatives)

INCOME

Premium from direct business written - net of GST 173 13 40

Total 173 13 40

EXPENSES

Commission paid direct — — —

Employees remuneration and welfare benets 84,154 24,366 25,447

Total 84,154 24,366 25,447

Transactions included in (b) above which are in excess of 10% of the total related transactions of the same

type are given below for the Financial Year 2018-19:

(` ‘000)

Particulars Munich Re ERGO

International AG

HDFC AMC Ltd HDFC Life HDFC Sales

Private Limited

INCOME

Premium from direct business

written - net of GST

— — 11,593 9,601 38,259

Commission received on

Reinsurance ceded

428,571 — — — —

Claims on Reinsurance ceded 1,939,053 — — — —

Other Income 768 41 ,874 — — —

Total 2,368,392 41 ,874 11,593 9,601 38,259

EXPENSES

Claims paid direct — — 69,394 1,108 —

Premium on Reinsurance ceded 2,275,117 — — — —

Interest on Debentures — 129,200 — — —

Dividend — 657,455 — — —

Commission Paid — — — — 502,117

Insurance Premium Paid — — — 12,112 —

Total 2,275,117 786,655 69,394 13,220 502,117

ASSETS

Account Balances

Other Receivable 768 10,129 — — —

LIABILITIES

Account Balances

Share Capital — 2,922,023 — — —

Securities Premium — 3,260,251 — — —

Debentures — 1,700,000 — — —

Balance due to other insurance

companies

696,468 — — — —

Interest Payable on Debentures — 47,854 — — —

Unallocated Premium — — 17,098 469 82

Agent Balances — — — — 56,620

112 13th Annual Report 2019-20

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

Transactions included in (b) above which are in excess of 10% of the total related transactions of the same

type are given below for the Financial Year 2018-19:

(` ‘000)

Particulars Ritesh Kumar

(Incl. Relatives)

Mukesh Kumar

(Incl. Relatives)

Anuj Tyagi (Incl.

Relatives)

Samir H. Shah

(Incl. Relatives)

INCOME

Premium from direct business written -

net of GST

179 — 109 7

Total 179 — 109 7

EXPENSES

Commission paid direct — — — —

Employees remuneration and welfare

benets

75,177 4,172 25,786 23,216

Total 75,177 4,172 25,786 23,216

21. LOAN RESTRUCTURING

The Company has not given any loans in the nancial year 2019-20 (Previous year ` Nil)

22. SUMMARY OF FINANCIAL STATEMENTS

The summary of nancial statements is provided in Annexure 3.

23. FOREIGN EXCHANGE GAIN/(LOSS) (NET)

(a) During the year Foreign Exchange Gain (net) earned by the Company is ` 3,163 thousand (Previous year

loss (net) incurred of ` 20,147 thousand) (included in Schedule 4 - Operating Expenses, under the head

“Miscellaneous Expenses”).

(b) The year end foreign currency exposure is ` Nil (Previous year ` Nil).

24. (a) CONTRIBUTION TO TERRORISM POOL

The Company is a participant in and has received the Terrorism Pool retrocession of premium in the current

nancial year.

(b) SOLATIUM FUND

The IRDAI had asked the General Insurance Council (“the Council”) to recommend the percentage of

contribution to be made to a Solatium Fund and matters relating to the administration of the Fund. The

Council has decided that The New India Assurance Company Limited would administer the fund. The Council

in its meeting held on May 6, 2005 approved the contribution of 0.10% of the motor gross written premium

with effect from the date of commencement of business, for private insurance companies.

Vide letter dated July 26, 2010, the Council recommended the companies w.e.f. April 1, 2010 to contribute

0.10% of all the third party premium written as Solatium Fund to the administrator on demand. However,

during the year the Company has provided charge to the Revenue Accounts of ` 18,178 thousand (Previous

year ` 14,249 thousand) on an accrual basis (see accounting policy in paragraph 2(u) above) and disclosed

under Current Liabilities.

113

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

During the year, an amount of ` 2,567 thousand (Previous year ` 3,021 thousand) was collected towards

Environment Relief Fund for public liability policies and an amount of ` 2,707 thousand (Previous year

` 2,992 thousand) has been transferred to “United India Insurance Company Limited, Environment Fund

Account” as per Notication of Environment Relief Fund (ERF) scheme under the Public Liability Insurance

Act, 1991 as amended. The balance amount of ` 32 thousand (Previous year ` 173 thousand) is included

under balance due to other Insurance Companies in Schedule 13.

25. EARNINGS PER SHARE (EPS)

Sr.

No.

Particulars For the year ended

March 31, 2020

For the year ended

March 31, 2019

Net Prot After Tax for the year (` ‘000)

3,269,418 3,829,877

Weighted Average No. of Equity Shares for Basic (` `000)

614,623 605,364

Weighted Average No. of Equity Shares for Diluted (` ‘000)

616,759 606,975

Basic Earnings per Share (`)

5.32 6.33

Diluted Earnings per Share (`)

5.30 6.31

Nominal Value per Share (`)

10.00 10.00

There are 2,136 thousand (Previous year 1,611 thousand) dilutive potential equity shares outstanding during

the year.

26. According to the information available with the Company there are no dues (Previous year ` Nil) including any

overdue amount (Previous year ` Nil) interest due thereon (Previous year ` Nil) and interest paid during the year

(Previous year ` Nil) to Micro and Small Enterprises as dened under Micro, Small and Medium Enterprises

Development Act, 2006 as at March 31, 2020.

27. PREMIUM DEFICIENCY

There is no premium deciency for the Company on an overall basis in accordance with Para 2(2) of Schedule II

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

Insurance Business) Regulations, 2016 (Previous year ` Nil).

28. STATEMENT SHOWING THE AGE-WISE ANALYSIS OF THE UNCLAIMED AMOUNT OF POLICYHOLDERS

The statement of age-wise analysis of the unclaimed amount of policyholders is provided in Annexure 4.

29. CORPORATE SOCIAL RESPONSIBILITY (CSR)

The Ministry of Corporate Affairs has notied Section 135 of the Companies Act, 2013 on Corporate Social

Responsibility with effect from April 1, 2014. As per the provisions of the said Section, the Company has undertaken

the following CSR initiatives during the nancial year 2019-20:

• “Adopt Village” program called “Gaon Mera” program introduced to improve the sanitation,

healthcare, education and livelihood of villagers in selected villages i.e. Jamkhar & Jabalapur in

Madhya Pradesh, Dombramattur & Haveri in Karnataka, Mithivavdi & Patan in Gujarat and Singachauri &

Sitamarhi in Bihar.

114 13th Annual Report 2019-20

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

• Besides the above, the other CSR related activities carried out by the Company included supply of free

sanitary napkins and sponsoring of education of girl child in rural/semi urban areas, cataract surgeries for

needy, providing support for cochlear implant treatment, bone marrow transplant and support to children

undergoing cancer treatment etc.

• In addition, specic COVID-19 related CSR activities were carried out which included providing sanitizers and

cotton masks for Mumbai Police, N95 masks for BMC run Nair Hospital staff and purchase of ventilators

for hospitals.

• Roshni: Spreading light through education. The initiative is designed with the aspiration of making 10,000

families nancially independent by educating, up-skilling and providing employment to the girl child in rural

India in the next 5 years.

The Gross amount required to be spent by the Company on CSR initiatives is ` 72,460 thousand (Previous year

` 34,511 thousand).

The amount spent during the year is as follows:

(` ‘000)

Sr.

No.

Particulars Incurred and Paid

For the year ended March 31, 2020

Incurred and Paid

For the year ended March 31, 2019

1 Construction / acquisition of any asset Nil Nil

2 On purposes other than (1) above 74,969* 40,901

*includes yet to be paid ` 1,280 thousand

30. PROVISION FOR FREE LOOK PERIOD

The provision for Free Look period is ` Nil (Previous year ` Nil), as certied by the Appointed Actuary.

31. DISCLOSURE ON OTHER WORK GIVEN TO AUDITORS

Pursuant to clause 7.1(g) of Corporate Governance Guidelines issued by IRDAI on May 18, 2016 the services of

the statutory auditors are disclosed below:

(` ‘000)

Name of the auditor Services rendered For the year ended

March 31, 2020

For the year ended

March 31, 2019

G. M. Kapadia & Co. Review of quarterly nancial information 1,416 1,416

Certication 188 267

B. K. Khare & Co. Tax Audit 472 472

Certication 197 60

115

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

32. PENALTIES LEVIED BY VARIOUS GOVERNMENT AUTHORITIES

(` ‘000)

Sr.

No.

Authority Non-Compliance/ Violation Penalty

Awarded

Penalty Paid Penalty Waived/

Reduced

1 Insurance Regulatory and

Development Authority of

India

N.A.

Settlement of Total Loss

cases under Motor at

lesser value than Insured

Declared Value (IDV).

Nil

(500)

Nil

(500)

Nil

2 Goods & Service Tax

Authorities

N.A.

(N.A.)

Nil

(Nil)

Nil

(Nil)

Nil

(Nil)

3 Income Tax Authorities N.A.

(N.A.)

Nil

(Nil)

Nil

(Nil)

Nil

(Nil)

4 Any other Tax Authorities N.A.

(N.A.)

Nil

(Nil)

Nil

(Nil)

Nil

(Nil)

5 Enforcement Directorate/

Adjudicating Authority /

Tribunal or any Authority

under FEMA

N.A.

(N.A.)

Nil

(Nil)

Nil

(Nil)

Nil

(Nil)

6 Registrar of Companies/

NCLT / CLB / Department

of Corporate Affairs or any

Authority under Companies

Act, 2013 /1956

N.A.

(N.A.)

Nil

(Nil)

Nil

(Nil)

Nil

(Nil)

7 Penalty awarded by any Court

/ Tribunal for any matter

including claim settlement

but excluding compensation

N.A.

(N.A.)

Nil

(Nil)

Nil

(Nil)

Nil

(Nil)

8 Securities and Exchange

Board of India

N.A.

(N.A.)

Nil

(Nil)

Nil

(Nil)

Nil

(Nil)

9 Competition Commission of

India

N.A.

(N.A.)

Nil

(Nil)

Nil

(Nil)

Nil

(Nil)

10 Any other Central/State/

Local Government/Statutory

Authority

N.A.

(N.A.)

Nil

(Nil)

Nil

(Nil)

Nil

(Nil)

(Previous year’s gures are in brackets)

33. As required by section 71 of the Companies Act, 2013, during the year, the Company has created Debenture

Redemption Reserve of ` 24,300 thousand upto June 30, 2019 (Previous year ended March 31, 2019 ` 97,200

thousand) on 10 years 3,500 nos. of 7.60% Unsecured, Subordinated, Fully paid up, Listed, Redeemable Non-

116 13th Annual Report 2019-20

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

Convertible Debentures (NCDs) having face value of ` 1,000 thousand each, issued for cash at par under NCD

Series 2016-17/1 with a call option after 5 years. Pursuant to the merger, the Company has taken over the

Transferor Company’s, 10 years, 800 nos. of 8.40% and 10 years, 740 nos. of 10.25% Unsecured, Subordinated,

Fully paid up, Listed, Redeemable Non-Convertible Debentures (NCDs) having face value of ` 1,000 thousand

each, issued for cash at par under NCD Series 2017-18/1 and 2018-19/1 respectively with a call option after

5 years.

Consequent to the issuance of the Companies (Share Capital and Debentures) Amendment Rules, 2019 (“Rules”)

on August 16, 2019 and in terms of Rule 18, sub-rule (7)(b)(iii)(B) of the said Rules, no Debenture Redemption

Reserve has been created from the date of issuance of the said Rules.

34. During the year, the Company had received an amount of ` Nil (Previous year ` 175,000 thousand) from Larsen

& Toubro Limited towards claims under Representation and Warranty, in terms of Share Sale and Purchase

agreement dated June 03, 2016. This amount was accounted under Other Income.

35. The Company has evaluated the impact of the Supreme Court Judgement in case of “ Vivekananda Vidyamandir

and others vs The Regional provident fund commissioner (I) West Bengal and related circular (Circular No - C-I1(33)

2019/Vivekanand Vidyamandir /284 dated March 20, 2019) issued by the EPFO in relation to non-inclusion

of certain allowances from the denition of “ basic wages “ under EPF and Miscellaneous Provision Act, 1952.

Based on the legal advice, with effect from April 2019, the Company has been depositing PF contribution on

basic salary and certain other allowances which are paid to all the employees.

36. The IRDAI vide its Circular No. IRDA/F&A/CIR/MISC/099/04/2020 dated April 24, 2020 has refrained insurance

companies from making dividend pay-outs from prots pertaining to the nancial year ended March 31, 2020 until

further instructions, with a view that insurance companies must conserve capital in the interest of policyholders

and economy at large, in an environment of heightened uncertainty caused by Covid-19. Accordingly, the Board of

Directors of the Company, at their meeting held on May 8, 2020, has not proposed any dividend for the year ended

March 31, 2020. During the previous year, the Board of Directors of the Company had approved the payment of

an interim dividend of ` 2.25 per equity share of ` 10 each and accordingly an amount of ` 1,642,204 thousand

(including Dividend Distribution Tax) was paid to the shareholders. No nal dividend was recommended by the

Board.

37. (a) In light of the Covid-19 outbreak and the information available upto the date of approval of these nancial

statements, the Company has assessed the impact of Covid-19 and the lock-down announced by the Central

Government, on its operations and its nancial statements. The assessment includes but is not limited

to valuation of investments, valuation of policy-related liabilities and solvency position of the Company as

at March 31, 2020. Further, there have been no material changes in the controls or processes followed

(except for the accounting of premium in relation to Motor third party liability cases as directed by IRDAI and

as mentioned below) in the nancial closing process of the Company. The Company continues to closely

monitor the implications of Covid-19 on its operations and nancial statements, which are dependent on

emerging uncertain developments.

(b) The Authority vide Circular No. IRDAI/NL/CIR/MOT/081/04/2020 dated April 3, 2020 has provided

clarications on its Circular No. IRDAI/NL/CIR/MOT/079/04/2020 dated April 2, 2020 issued in relation to

accounting of premium on the Motor third party liability cases falling due for renewal during the lockdown

period (25

March, 2020 to 14

April, 2020)(subsequently extended to 3

May, 2020) as a result of Covid-19

pandemic.

117

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

Accordingly, the Company has booked Gross written premium of ` 421,257 thousand for both Standalone

Motor Third Party and TP portion of Package policies falling due for renewal during the period from March 25,

2020 to March 31, 2020 and for which premium has not yet been received during FY 2019-20 and which has

accordingly been reected under Outstanding Premium. The Net Earned Premium on the premium booked is

` 2,321 thousand and an Unexpired Risk reserve of ` 288,347 thousand and a claims reserve of ` 911 thousand

has been created on the same for FY 2019-20.

38. Previous year gures have been regrouped in respect of the following items for better presentation, understanding

and comparability with those of the current year.

A) Prot & Loss Account and Revenue Account

(` in ‘000)

Sr.

No.

Description Regrouped from Regrouped to Amount

1 Accretion / (Amortisation)

of Debt Securities*

Profit & Loss Account :

Accretion / (Amortisation)

of Debt Securities

Profit & Loss Account :

Interest, Dividend and Rent

– Gross

(35,618)

2 Accretion / (Amortisation)

of Debt Securities*

Revenue Account :

Accretion / (Amortisation)

of Debt Securities

Revenue Account :

Interest, Dividend and Rent

– Gross

(82,768)

3 Payment Gateway Charges Schedule 4 - Operating

Expenses Related to

Insurance Business :

Legal and Professional

charges

Schedule 4 - Operating

Expenses Related to

Insurance Business :

Interest and bank charges

31,406

*Regrouping has been done in terms of the requirements of Para 3 of IRDAI Circular No. IRDA/F&A/CIR/

MISC/081/05/2019 dated May 20, 2019, to adhere to the format prescribed by IRDA (Preparation of

Financial Statement and Auditors Report of Insurance Companies) Regulation 2002.

B) Balance Sheet

(` in ‘000)

Sr.

No.

Description Regrouped from Regrouped to Amount

1 Unclaimed Amount of

Policyholders (Investment)

Schedule 11 - Cash & Bank

Balance :

Deposit Accounts (Short

term)

Schedule 12 - Advances

and Other Assets :

Unclaimed amount of

Policyholders (Investment)

133,798

Schedule 11 – Cash &

Bank Balance :

Deposit Accounts (Short

term)

Schedule 12 - Advances

and Other Assets :

Income on Unclaimed

amount of Policyholders

(Investment)

17,619

2 Income on Unclaimed

Amount of Policyholders

(Investment)

Schedule 12 - Advance and

Other Assets :

Advance to Suppliers

Schedule 12 - Advances

and Other Assets :

Income on Unclaimed

amount of Policyholders

(Investment)

7,843

118 13th Annual Report 2019-20

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

(` in ‘000)

Sr.

No.

Description Regrouped from Regrouped to Amount

3 Unclaimed Amount of

Policyholders – Income

thereon

Schedule 13 – Current

Liabilities :

Unclaimed Amount of

Policyholders

Schedule 13 - Current

Liabilities :

Unclaimed Amount of

Policyholders – Income

thereon

25,462

4 Amount transferred to

Senior Citizen Welfare

Fund (SCWF) which

subsequently claimed

by Policyholder, adjusted

against Unclaimed Amount

of Policyholders

Schedule 13 – Current

Liabilities :

Unclaimed Amount of

Policyholders

Schedule 12 - Advances

and Other Assets :

Advance to Suppliers

The Receipts and Payments Account has accordingly been appropriately represented.

Signature to the Notes to Accounts

For and on behalf of the Board of Directors

Mumbai,

Dated: November 13, 2020

Keki M. Mistry

Director

(DIN: 00008886)

Samir H. Shah

Executive Director & CFO

(DIN: 08114828)

Ritesh Kumar

Managing Director & CEO

(DIN: 02213019)

Anuj Tyagi

Executive Director & Chief Business Ofcer

(DIN: 07505313)

Dayananda V. Shetty

Company Secretary and

Chief Compliance Ofcer

(Membership No: FCS 4638)

119

Annexure 1

Segmental Breakup of the Balance Sheet as at March 31, 2020

Segment revenue and segment results have been incorporated in the nancial statements. However given the

nature of business, segment assets and liabilities, have been allocated amongst various segments to the extent

possible.

(` ’000)

Particulars Fire Marine Miscellaneous Unallocated Total

Claims Outstanding 1,079,659 488,844 45,993,376 — 47,561,879

(Refer note 2(h)) (827,002) (506,522) (34,253,316) — (35,586,841)

Reserve for Unexpired Risk 2,970,513 193,383 39,102,716 — 42,266,612

(2,163,723) (195,678) (26,054,115) — (28,413,516)

(Previous year’s gures are in brackets)

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

120 13th Annual Report 2019-20

SEGMENT REPORTING FOR THE YEAR ENDED MARCH 31, 2020

Annexure 1

(` ’000)

Fire Marine

Cargo

Marine-

Hull

Motor Motor-OD Motor-TP Workmens

Compensation

Public

Liability

Product

Liability

Other

Liabilities

Engineering Aviation Personal

Accident

Health Home Specialty * Weather/

Crop

Others Total

Premium Earned (Net) (Schedule - A) 1,459,430 719,855 1,396 24,218,975 12,696,411 11,522,564 180,985 17,302 3,881 334,385 510,171 3,327 4,201,836 7,693,565 17,289 553,841 3,783,100 804,177 44,503,515

Prot on Sale of Investments 29,659 5,767 65 379,827 68,797 311,030 2,013 141 79 2,470 4,355 989 65,915 115,019 344 3,677 28,948 8,727 647,996

Interest, Rent and Dividend (Net of Amortisation) 305,323 59,365 669 3,910,042 708,214 3,201,828 20,723 1,449 818 25,431 44,832 10,185 678,545 1,184,038 3,546 37,849 298,001 89,841 6,670,657

Investment Income from Pool 30,188 — — — — — — — — — — — — — — — — — 30,188

Other Income 1,487 750 1 25,238 13,231 12,008 189 18 4 348 524 — 4,379 10,163

18 577 3,942 838 48,477

Total Segmental Revenue 1,826,087 785,738 2,131 28,534,082 13,486,653 15,047,430 203,909 18,911 4,783 362,635 559,882 14,502 4,950,674 9,002,786 21,198 595,944 4,113,992 903,583 51,900,833

Claims Incurred (Net) (Schedule - B) 1,021,394 585,969 3,530 19,183,282 10,380,603 8,802,679 172,947 2,835 814 164,347 710,273 (24,053) 1,866,261 7,280,825 13,036 114,388 3,273,563 871,774 35,241,188

Commission (Net) (Schedule - C) (292,127) 96,668 (1,350) 1,066,682 2,161,410 (1,094,727) 23,520 2,293 638 38,050 (136,297) (5,422) (335,145) (1,509,231) 741 39,057 (1,091,386) (15,732) (2,119,040)

Operating Expenses Related to Insurance

Business (Schedule - D)

1,605,038 258,829 34,717 5,034,782 2,367,567 2,740,926 30,305 5,956 709 128,033 300,276 19,164 994,019 2,417,165 1,769 255,205 3,436,141 287,639 14,809,749

Premium Deciency — — — — — — — — — — — — — — — — — — —

Total Segmental Expenditure 2,334,304 941,466 36,897 25,284,746 14,909,580 10,448,878 226,772 11,085 2,161 330,430 874,253 (10,310) 2,525,135 8,188,759 15,547 408,651 5,618,318 1,143,681 47,931,897

Segmental Prot/(Loss) (508,217) (155,728) (34,766) 3,249,336 (1,422,927) 4,598,552 (22,863) 7,826 2,621 32,205 (314,371) 24,812 2,425,539 814,027 5,651 187,293 (1,504,326) (240,098) 3,968,937

*Includes - 1. Director’s and ofcers’ liability

2. Mutual Fund assets protection

SCHEDULE - A to Annexure 1

(` ’000)

Fire Marine

Cargo

Marine-

Hull

Motor Motor-OD Motor-TP Workmens

Compensation

Public

Liability

Product

Liability

Other

Liabilities

Engineering Aviation Personal

Accident

Health Home Specialty Weather/

Crop

Others Total

PREMIUM EARNED [NET]

(Refer Notes 8 and 9 of Schedule 16)

Premium from direct business written-net of GST 9,794,450 1,613,803 230,254 33,880,743 15,702,268 18,178,476 200,988 36,112 3,994 807,010 1,910,877 127,101 6,578,534 16,031,212 11,731 1,530,512 21,631,396 1,907,156 96,295,874

Add: Premium on Re-insurance accepted 891,437 102,814 — — — — — 3,389 708 42,137 87,961 — 14,038 — — 162,071 — 535 1,305,091

Less: Premium on Re-insurance ceded (8,419,667) (998,423) (229,493) (8,870,203) (3,194,070) (5,676,132) (13,647) (22,181) (1,445) (509,160) (1,348,224) (124,003) (2,196,287) (6,440,766) (3,444) (1,060,868) (17,829,996) (864,501) (48,932,306)

Net Premium 2,266,220 718,194 761 25,010,541 12,508,198 12,502,343 187,341 17,320 3,257 339,988 650,615 3,098 4,396,285 9,590,447 8,287 631,715 3,801,400 1,043,190 48,668,660

Add/(Less): Adjustment for changes in reserve

for unexpired risks

(806,790) 1,661 634 (791,566) 188,213 (979,779) (6,356) (17)

624 (5,603) (140,444) 229 (194,452) (1,896,880) 9,003 (77,874) (18,300) (239,015) (4,165,145)

Total Premium Earned 1,459,430 719,855 1,396 24,218,975 12,696,411 11,522,564 180,985 17,302 3,881 334,385 510,171 3,327 4,201,836 7,693,565 17,289 553,841 3,783,100 804,177 44,503,515

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

121

SEGMENT REPORTING FOR THE YEAR ENDED MARCH 31, 2020 (Continued)

SCHEDULE - B to Annexure 1

(` ’000)

Fire Marine

Cargo

Marine-

Hull

Motor Motor-OD Motor-TP Workmens

Compensation

Public

Liability

Product

Liability

Other

Liabilities

Engineering Aviation Personal

Accident

Health Home Specialty Weather/

Crop

Others Total

CLAIMS INCURRED [NET]

(Refer Note 7 of Schedule 16)

Claims paid direct 3,458,660 1,195,616 42,410 16,052,977 13,026,967 3,026,010 122,377 36 — 273,052 887,857 132,705 1,927,247 9,043,611 4,538 562,538 8,579,875 992,979 43,276,477

Add: Claims on Re-insurance accepted 234,881 95,902 —

— — — — — — 34,267 13,322 27,785 6 3,967 — — — — 410,130

Less: Re-insurance ceded (2,924,805) (684,474) (42,276) (3,177,764) (2,964,974) (212,790) (6,198) (2) — (157,058) (413,927) (126,177) (581,888) (2,145,852) (278) (473,153) (6,768,645) (316,748) (17,819,245)

Net Claims paid 768,736 607,044 133 12,875,213 10,061,993 2,813,219 116,179 35 — 150,261 487,252 34,313 1,345,365 6,901,727 4,260 89,385 1,811,230 676,230 25,867,362

Add: Claims Outstanding at the end of the year 1,079,659 480,513 8,331 35,162,149 1,936,519 33,225,630 189,817 11,027 8,612 148,886 406,368 88,080 1,267,255 4,035,386 14,936 196,600 3,986,643 477,617 47,561,878

Less: Claims Outstanding on account of Merger

as on March 1, 2020

— — — — — — — — — — — — (116,339) (2,484,875) — — — — (2,601,214)

Less: Claims Outstanding at the beginning

of the year

(827,002) (501,588) (4,934) (28,854,080) (1,617,909) (27,236,171) (133,049) (8,226) (7,797) (134,800) (183,347) (146,445) (630,020) (1,171,413) (6,159) (171,597) (2,524,310) (282,073) (35,586,840)

Total Claims Incurred 1,021,394 585,969 3,530 19,183,282 10,380,603 8,802,679 172,947 2,835 814 164,347 710,273 (24,053)

1,866,261 7,280,825 13,036 114,388 3,273,563 871,774 35,241,188

SCHEDULE - C to Annexure 1

(` ’000)

Fire Marine

Cargo

Marine-

Hull

Motor Motor-OD Motor-TP Workmens

Compensation

Public

Liability

Product

Liability

Other

Liabilities

Engineering Aviation Personal

Accident

Health Home Specialty Weather/

Crop

Others Total

COMMISSION PAID [NET]

Commission paid direct 860,376 180,992 1,845 3,048,423 2,800,957 247,466 25,999 2,593 600 84,187 119,063 4,602 821,333 2,056,885 1,054 164,247 37,427 107,501 7,517,128

Add: Commission paid on Re-insurance accepted 47,297 4,652 — — — — — 733 124 8,595 6,018 — 767 — — 28,208 — 5 96,398

Less: Commission received on Re-insurance

ceded

(1,199,799) (88,975) (3,196) (1,981,739) (639,546) (1,342,193) (2,479) (1,032) (86) (54,733) (261,378) (10,024) (1,157,245) (3,566,116) (313) (153,398) (1,128,813) (123,239) (9,732,566)

Net commission paid/(received) (292,127) 96,668 (1,350) 1,066,682 2,161,410 (1,094,727) 23,520 2,293 638 38,050 (136,297) (5,422) (335,145) (1,509,231) 741 39,057 (1,091,386) (15,732) (2,119,040)

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

122 13th Annual Report 2019-20

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

SEGMENT REPORTING FOR THE YEAR ENDED MARCH 31, 2020 (Continued)

SCHEDULE - D to Annexure 1

(` ’000)

Fire Marine

Cargo

Marine-

Hull

Motor Motor-OD Motor-TP Workmens

Compensation

Public

Liability

Product

Liability

Other

Liabilities

Engineering Aviation Personal

Accident

Health Home Specialty Weather/

Crop

Others Total

OPERATING EXPENSES RELATED TO INSURANCE

BUSINESS

Employees’ remuneration and welfare benets 453,941 73,203 9,819 1,444,797 669,601 775,196 8,571 1,684 200 36,211 84,925 5,420 281,131 683,629 500 72,178 922,441 81,351 4,160,002

Travel, conveyance and vehicle running expenses 33,135 5,343 717 105,461 48,877 56,585 626 123 15 2,643 6,199 396 20,521 49,901 37 5,269 67,333 5,938 303,655

Training expenses 80,933 13,051 1,751 257,593 119,383 138,210 1,528 300 36 6,456 15,141 966 50,123 121,884 89 12,869 164,462 14,504 741,688

Rents, rates and taxes 43,018 6,937 930 136,917 63,455 73,462 812 160 19 3,432 8,048 514 26,642 64,785 47 6,840 87,416 7,709 394,226

Repairs 15,654 2,524 339 49,824 23,091 26,732 296 58 7 1,249 2,929 187 9,695 23,575 17 2,489 31,810 2,805 143,457

Printing and stationery 18,773 3,027 406 59,750

27,691 32,058 354 70 8 1,497 3,512 224 11,626 28,271 21 2,985 38,148 3,364 172,037

Communication 6,352 1,024 137 20,216 9,369 10,847 120 24 3 507 1,188 76 3,934 9,566 7 1,010 12,907 1,138 58,209

Legal and professional charges 327,318 52,784 7,080 968,074 482,822 558,962 6,180 1,215 145 26,110 61,236 3,908 202,712 492,937 361 52,044 665,134 58,659 2,925,897

Auditors’ fees, expenses etc

(a) as auditors 1,032 166 22 3,283 1,522 1,762 19 4 — 82 193 12 639 1,554 1 164 2,096 185 9,453

(b) as advisor or in any other capacity,in

respect of:

(i) Taxation matters — — — — — — — — — — — — — — — — — — —

(ii) Insurance matters — — — — — — — — — — — — — — — — — — —

(iii) Management services — — — — — — — — — — — — — — — — — — —

Advertisement and publicity 466,719 75,263 10,095 1,485,467 688,450 797,017 8,812 1,732 206 37,230 87,316 5,573 289,045 702,872 514 74,210 948,407 83,641 4,277,101

Interest and bank charges 28,978 4,673 627 92,229 42,744 49,485 547 108 13 2,312 5,421 346 17,946 43,640 32 4,608 233,473 5,193 440,144

Others:

Electricity expenses 8,973 1,447 194 28,560 13,236 15,324 169 33 4 716 1,679 107 5,557 13,514 10 1,427 18,234 1,608 82,232

Ofce expenses 4,219 680 91 13,429 6,224 7,205 80 16 2 337 789 50 2,613 6,354 5 671 8,574 756 38,667

Miscellaneous expenses 10,821 1,745 234 34,441 15,962 18,479 204 40 5 863 2,024 129 6,702 16,296 12 1,721 21,989 1,939 99,167

Information Technology expenses 44,023 7,099 952 140,116 64,938 75,178 831 163 19 3,512 8,236 526 27,264

66,298 49 7,000 89,458 7,889 403,436

Postage and courier 16,113 2,598 349 51,285 23,768 27,516 304 60 7 1,285 3,015 192 9,979 24,266 18 2,562 32,743 2,888 147,664

Loss/(Prot) on sale of assets (net) (112) (18) (2) (357) (166) (192) (2) — — (9) (21) (1) (70) (169) — (18) (228) (20) (1,028)

Depreciation 44,643 7,199 966 142,088 65,852 76,236 843 166 20 3,561 8,352 533 27,648 67,231 49 7,098 90,717 8,000 409,113

Total Operating Expenses 1,605,038 258,829 34,717 5,034,782 2,367,567 2,740,926 30,305 5,956 709 128,033 300,276 19,164 994,019 2,417,165 1,769 255,205 3,436,141 287,639 14,809,749

123

SEGMENT REPORTING FOR THE YEAR ENDED MARCH 31, 2019

Annexure 1

(` ’000)

Fire Marine

Cargo

Marine-

Hull

Motor Motor-OD Motor-TP Workmens

Compensation

Public

Liability

Product

Liability

Other

Liabilities

Engineering Aviation Personal

Accident

Health Home Specialty * Weather/

Crop

Others Total

Premium Earned (Net) (Schedule - A) 991,370 601,643 1,609 20,212,245 11,660,818 8,551,427 138,992 16,493 5,550 282,944 354,944 515 3,821,350 6,710,341 16,555 457,282 3,877,621 610,653 38,100,107

Prot on Sale of Investments 29,234 6,720 56 367,275 74,413 292,863 1,800 148 97 2,289 3,323 1,662 67,270 59,643 420 3,720 28,211 7,131 578,999

Interest, Rent and Dividend (Net of

Amortisation)

254,179 58,431 485 3,193,294 646,985 2,546,309 15,647 1,289 846 19,903 28,893 14,449 584,881 518,573 3,650 32,342 245,284 62,001 5,034,147

Investment Income from Pool 44,972 — — — — — — — — — — — — — — — — — 44,972

Other Income 1,522 948 3 31,851 18,376 13,476 219 26 9 446 548 — 6,022 10,574 26 721 6,110 962 59,987

Total Segmental Revenue 1,321,277 667,743 2,152 23,804,665 12,400,591

11,404,074 156,658 17,956 6,502 305,582 387,709 16,625 4,479,523 7,299,132 20,651 494,065 4,157,227 680,747 43,818,212

Claims Incurred (Net) (Schedule - B) 528,742 560,411 1,849 16,530,458 9,134,315 7,396,143 92,771 (1,205) (1,079) 78,236 312,608 62,821 1,191,921 5,368,123 2,943 102,327 3,639,668 621,221 29,091,815

Commission (Net) (Schedule - C) (549,837) 100,086 (8,162) 1,777,771 2,192,870 (415,099) 21,735 2,536 886 52,641 (103,186) (6,577) (297,259) (1,467,538) 1,222 41,491 (972,399) (119,365) (1,525,955)

Operating Expenses Related to Insurance

Business (Schedule - D)

1,009,011 197,960 48,278 3,911,254 2,090,000 1,821,255 24,710 4,772 1,336 110,958 200,061 35,535 890,206 1,634,453 3,199 172,617 2,854,211 214,732 11,313,294

Premium Deciency — — — — — — — — — — — — — — — — — — —

Total Segmental Expenditure 987,916 858,457 41,964 22,219,482 13,417,184 8,802,299 139,215 6,103 1,142 241,836 409,483 91,779 1,784,867 5,535,038 7,364 316,435 5,521,480 716,588 38,879,154

Segmental Prot/(Loss) 333,361 (190,714) (39,812) 1,585,183 (1,016,593) 2,601,775 17,443 11,853 5,359 63,746 (21,774) (75,154) 2,694,655 1,764,093 13,286 177,630 (1,364,253) (35,841)

4,939,058

*Includes - 1. Director’s and ofcers’ liability

2. Mutual Fund assets protection

SCHEDULE - A to Annexure 1

(` ’000)

Fire Marine

Cargo

Marine-

Hull

Motor Motor-OD Motor-TP Workmens

Compensation

Public

Liability

Product

Liability

Other

Liabilities

Engineering Aviation Personal

Accident

Health Home Specialty Weather/

Crop

Others Total

PREMIUM EARNED [NET]

(Refer note 8 and 9 of Schedule 16)

Premium from direct business written-

net of GST

7,196,478 1,423,722 377,703 30,599,856 16,351,195 14,248,661 193,318 35,745 10,095 829,745 1,490,983 280,321 6,944,603 12,787,131 25,028 1,261,306 20,994,017 1,678,454 86,128,508

Add: Premium on Re-insurance accepted 734,006 125,023 — — — — — 1,592 358 38,341 81,768 (2,311) 19,958 77 — 89,173 — 1,509 1,089,495

Less: Premium on Re-insurance ceded (6,869,655) (895,928) (376,308) (7,054,199) (3,745,085) (3,309,114) (31,209) (18,692) (4,606) (523,750) (1,211,460) (278,104) (2,112,010) (5,127,818) (8,148) (868,960) (17,193,857) (915,425) (43,490,129)

Net Premium 1,060,828 652,817 1,396 23,545,657 12,606,110 10,939,547 162,109 18,645 5,847 344,337 361,291 (94) 4,852,551 7,659,390 16,880 481,519 3,800,161 764,538 43,727,874

Add/(Less): Adjustment for changes in

reserve for unexpired risks

(69,458) (51,174) 213 (3,333,412) (945,292) (2,388,120) (23,117) (2,152) (297) (61,393) (6,347) 609 (1,031,202) (949,049) (325) (24,237) 77,461 (153,887) (5,627,767)

Total Premium Earned 991,370 601,643

1,609 20,212,245 11,660,818 8,551,427 138,992 16,493 5,550 282,944 354,944 515 3,821,350 6,710,341 16,555 457,282 3,877,621 610,653 38,100,107

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

124 13th Annual Report 2019-20

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

SEGMENT REPORTING FOR THE YEAR ENDED MARCH 31, 2019 (Continued)

SCHEDULE - B to Annexure 1

(` ’000)

Fire Marine

Cargo

Marine-

Hull

Motor Motor-OD Motor-TP Workmens

Compensation

Public

Liability

Product

Liability

Other

Liabilities

Engineering Aviation Personal

Accident

Health Home Specialty Weather/

Crop

Others Total

CLAIMS INCURRED [NET]

(Refer note 7 of Schedule 16)

Claims paid direct 2,776,589 1,142,649 138,058 15,503,956 11,585,448 3,918,508 64,487 3 — 1,152,400 630,338 199,786 1,675,395 6,659,100 5,674 181,791 18,608,349 1,210,825 49,949,399

Add: Claims on Re-insurance accepted 162,601 85,316 — — — — — — — — 6,818 71,565 1,627 16,862 — 286 — — 345,075

Less: Re-insurance ceded (2,474,923) (663,867) (137,917) (5,244,554) (2,822,968) (2,421,586) (3,383) — — (1,121,656) (323,893) (170,211) (477,744) (1,621,029) (440) (81,414) (14,794,668) (646,569) (27,762,269)

Net Claims paid 464,267 564,097 142 10,259,402 8,762,480 1,496,921 61,103 3 — 30,744 313,263 101,140 1,199,278 5,054,933 5,234 100,663 3,813,680 564,255 22,532,205

Add: Claims Outstanding at the end

of the year

827,002 501,588 4,934 28,854,080 1,617,909 27,236,171 133,049 8,226 7,797 134,800 183,347 146,445 630,020 1,171,413 6,159 171,597 2,524,310 282,073 35,586,839

Less: Claims Outstanding at the beginning

of the year

(762,527) (505,274)

(3,226) (22,583,023) (1,246,074) (21,336,949) (101,382) (9,434) (8,876) (87,307) (184,002) (184,764) (637,377) (858,223) (8,450) (169,933) (2,698,323) (225,108) (29,027,229)

Total Claims Incurred 528,742 560,411 1,849 16,530,458 9,134,315 7,396,143 92,771 (1,205) (1,079) 78,236 312,608 62,821 1,191,921 5,368,123 2,943 102,327 3,639,668 621,221 29,091,815

SCHEDULE - C to Annexure 1

(` ’000)

Fire Marine

Cargo

Marine-

Hull

Motor Motor-OD Motor-TP Workmens

Compensation

Public

Liability

Product

Liability

Other

Liabilities

Engineering Aviation Personal

Accident

Health Home Specialty Weather/

Crop

Others Total

COMMISSION PAID [NET]

Commission paid direct 560,518 177,467 13,296 3,109,829 2,943,480 166,349 23,711 2,989 1,308 98,155 105,251 5,548 828,854 1,411,611 1,663 145,877 4,858 67,724 6,558,658

Add: Commission paid on

Re-insurance accepted

31,176 6,835 — — — — — 315 36 7,544 5,698 85 408 9 — 17,852 — 19 69,975

Less: Commission received on

Re-insurance ceded

(1,141,530) (84,216) (21,458) (1,332,058) (750,610) (581,448) (1,976) (768) (458) (53,057) (214,135) (12,210) (1,126,521) (2,879,158) (441) (122,238) (977,257) (187,108) (8,154,588)

Net commision paid/(received) (549,837) 100,086 (8,162) 1,777,771 2,192,870 (415,099) 21,735 2,536 886 52,641 (103,186) (6,577) (297,259) (1,467,538) 1,222 41,491 (972,399) (119,365) (1,525,955)

125

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

SEGMENT REPORTING FOR THE PERIOD ENDED MARCH 31, 2019 (Continued)

SCHEDULE - D to Annexure 1

(` ’000)

Fire Marine

Cargo

Marine-

Hull

Motor Motor-OD Motor-TP Workmens

Compensation

Public

Liability

Product

Liability

Other

Liabilities

Engineering Aviation Personal

Accident

Health Home Specialty Weather/

Crop

Others Total

OPERATING EXPENSES RELATED TO INSURANCE

BUSINESS

Employees’ remuneration and welfare benets 304,259 59,693 14,558 1,179,408 630,223 549,185 7,451 1,439 403 33,459 60,327 10,715 268,435 492,857 965 52,051 809,171 64,751 3,359,941

Travel, conveyance and vehicle running expenses 15,623 3,065 747 60,559 32,360 28,199 383 74 21 1,718 3,098 550 13,783 25,307 50 2,673 41,548 3,325 172,523

Training expenses 57,748 11,330 2,763 223,850 119,615 104,234 1,414 273 76 6,350 11,450 2,034 50,948 93,543 183 9,879 153,579 12,290 637,711

Rents, rates and taxes 34,032 6,677 1,628 131,918 70,491 61,427 833 161 45 3,742 6,748 1,199 30,025 55,127 108 5,822 90,507 7,242 375,814

Repairs 13,885 2,724 664 53,824 28,761 25,063 340 66 18 1,527 2,753 489 12,250 22,492 44 2,375 36,927 2,955 153,335

Printing and stationery 13,430 2,635 643 52,057

27,817 24,240 329 64 18 1,477 2,663 473 11,848 21,754 43 2,297 35,716 2,858 148,303

Communication 5,239 1,028 251 20,307 10,851 9,456 128 25 7 576 1,039 184 4,622 8,486 17 896 13,932 1,115 57,852

Legal and professional charges 216,908 42,556 10,378 840,806 449,289 391,517 5,312 1,026 287 23,853 43,007 7,639 191,368 351,360 688 37,108 576,862 46,161 2,395,319

Auditors’ fees, expenses etc

(a) as auditors 921 181 44 3,570 1,908 1,662 23 4 1 101 183 32 813 1,492 3 158 2,449 196 10,170

(b) as advisor or in any other capacity,in

respect of:

(i) Taxation matters — — — — — — — — — — — — — — — — — — —

(ii) Insurance matters — — — — — — — — — — — — — — — — — — —

(iii) Management services — — — — — — — — — — — — — — — — — — —

Advertisement and publicity 216,946 42,563 10,380 840,953 449,368 391,585 5,313 1,026 287 23,857 43,015 7,640 191,402 351,421 688 37,114 576,963 46,169 2,395,738

Interest and bank charges 21,783 4,274 1,042 84,436 45,119 39,317 533 103 29 2,395 4,319 767 19,218 35,285 69 3,726 228,699 4,636 411,314

Others:

Electricity expenses 6,997 1,373 335 27,121 14,492 12,629 171 33 9 769 1,387 246 6,173 11,334 22 1,197 18,607 1,489 77,264

Ofce expenses 3,617 710 173 14,021 7,492 6,529 89 17 5 398 717 127 3,191 5,859 11 619 9,619 770 39,942

Miscellaneous expenses 16,176 3,174 774 62,704 33,506 29,198 396 77 21 1,779 3,207 570 14,271 26,203 51 2,767 43,020 3,442 178,632

Information Technology expenses 36,656 7,192 1,754 142,090 75,926 66,163 898 173 49 4,031 7,268 1,291 32,340

59,377 116 6,271 97,485 7,801 404,790

Postage and courier 13,788 2,705 660 53,446 28,559 24,887 338 65 18 1,516 2,734 486 12,164 22,334 44 2,359 36,668 2,934 152,259

Loss / (Prot) on sale of assets (Net) 263 52 13 1,020 545 475 6 1 — 29 52 9 232 426 1 45 699 56 2,904

Depreciation 30,541 5,992 1,461 118,387 63,261 55,126 748 144 40 3,359 6,056 1,076 26,945 49,472 97 5,225 81,224 6,500 337,266

Total Operating Expenses 1,009,011 197,960 48,278 3,911,254 2,090,000 1,821,255 24,710 4,772 1,336 110,958 200,061 35,535 890,206 1,634,453 3,199 172,617 2,854,211 214,732 11,313,294

126 13th Annual Report 2019-20

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

Annexure 2

Ratios for Non-Life Companies

Sr.

No.

Performance Ratio As on 31st March 2020 As on 31st March 2019

Fire Marine Miscellaneous Total Fire Marine Miscellaneous Total

1 Gross premium growth rate (refer note 1a and 1b) 36.10% 2.37% 9.76% 11.80% 16.07% 24.59% 18.20% 18.15%

Gross Premium for Current period / Gross Premium for

Previous period

2 Gross Premium to shareholders' fund ratio NA NA NA 3.79 NA NA NA 4.34

Gross Premium for Current period / (Paid up Capital plus

Free Reserves)

3 Growth rate of shareholders' funds NA NA NA 28.27% NA NA NA 12.56%

Shareholders' funds as at the current balance sheet date /

Shareholders' funds at the previous balance sheet date

4 Net retention ratio (refer note 1a and 1b) 21.21% 36.93% 53.77% 49.86% 13.38% 33.96% 54.31% 50.14%

Net Premium / Gross Premium

5 Net commission ratio (refer note 1a and 1b) -12.89% 13.26% -4.21% -4.35% -51.83% 14.05% -2.54% -3.49%

Net Commission / Net Premium

6 Expenses of Management to gross direct Premium ratio 25.17% 25.83% 22.90% 23.19% 21.81% 24.26% 20.57% 20.75%

Operating Expenses + Gross Commission/ Gross Premium

7 Expenses of Management to Net written Premium ratio 108.79% 66.26% 42.43% 45.88% 147.95% 66.80% 37.76% 40.87%

Operating Expenses + Gross Commission/ Net Premium

8 Net Incurred Claims to Net Earned Premium 69.99% 81.73% 79.46% 79.19% 53.33% 93.20% 76.70% 76.36%

Net incurred Claim / Net earned premium

9 Combined ratio 127.92% 135.82% 103.52% 105.26% 96.62% 144.89% 98.10% 98.74%

Net incurred Claim, Net Commission plus Operating

Expense / Net Premium + Net earned premium

10 Technical reserves to net Premium ratio 1.79 0.95 1.86 1.85 2.82 1.07 1.44 1.46

Reserve for Unexpired Risks plus Deciency Reserve plus

Reserve for Outstanding Claims / Net Premium

11 Underwriting balance ratio -0.60 -0.36 -0.05 -0.08

0.00 -0.49 -0.01 -0.02

Underwriting Prot / Net Premium

12 Operating prot ratio -34.82% -26.41% 11.03% 8.92% 33.63% -38.21% 13.25% 12.96%

Underwriting Prot plus Investment Income / Net Premium

13 Liquid assets to liabilities ratio NA NA NA 0.31 NA NA NA 0.20

Liquid Assets of the Insurer / Policyholders' Liabilities

14 Net earnings ratio NA NA NA 6.72% NA NA NA 8.76%

Prot after Tax / Net Premium

15 Return on net worth NA NA NA 12.86% NA NA NA 19.32%

Prot After Tax / Net Worth

16 Available Solvency Margin (ASM) to Required Solvency

Margin (RSM)

NA NA NA 1.78 NA NA NA 1.75

ASM / RSM

17 NPA ratio NA NA NA NA NA NA NA NA

127

Annexure 2

Ratios for Non-Life Companies (Continued)

Notes:

1a. Miscellaneous Breakup for the year ended March 31, 2020

Sr. No. Particulars Miscelleneous

Motor

Workmens

Compensation

Public

Liability

Product

Liability

Engineering Aviation

Personal

Accident

Health

Insurance

Others

Total

Miscellenous

Motor-OD Motor-TP Motor Total Other

Liability

Home Specialty Weather/

Crop

Others

1 Gross premium growth rate -3.97% 27.58% 10.72% 3.97% 1.03% -60.44% 28.16% -54.66% -5.27% 25.37% -2.74% -53.13% 21.34% 3.04% 13.63% 9.76%

Gross Premium for Current period /

Gross Premium for Previous period

2 Net retention ratio 79.66% 68.78% 73.82% 93.21% 43.85% 69.27% 32.55% 2.44% 66.69% 59.82% 40.04% 70.64% 37.32% 17.57% 54.68% 53.77%

Net Premium / Gross Premium

3 Net commission ratio 17.28% -8.76% 4.26% 12.55% 13.24% 19.60% -20.95% -175.01% -7.62% -15.74% 11.19% 8.95% 6.18% -28.71% -1.51% -4.21%

Net Commission / Net Premium

1b. Miscellaneous Breakup for the year ended March 31, 2019

Sr. No. Particulars Miscelleneous

Motor

Workmens

Compensation

Public

Liability

Product

Liability

Engineering Aviation

Personal

Accident

Health

Insurance

Others

Total

Miscellenous

Motor-OD Motor-TP Motor Total Other

Liability

Home Specialty Weather/

Crop

Others

1 Gross premium growth rate 19.62% 51.63% 32.66% 41.96% 60.02% -57.12% 20.01% 32.11% 17.08% 28.83% 61.82% -21.03% 45.35% -4.63% 32.31% 18.20%

Gross Premium for Current period /

Gross Premium for Previous period

2 Net retention ratio 77.10 % 76.78% 76.95% 83.86% 49.94% 55.94% 22.97% -0.03% 69.67% 59.90% 39.67% 67.45% 35.66% 18.10% 45.51% 54.31%

Net Premium / Gross Premium

3 Net commission ratio 17.40% -3.79% 7.55% 13.41% 13.60% 15.14% -28.56% 7013.28% -6.13% -19.16% 15.29% 7.24% 8.62% -25.59% -15.61% -2.54%

Net Commission / Net Premium

2. Gross Premium represents Gross Direct Premium.

3. Net Premium represents Gross Direct Premium including Premium accepted on reinsurance less reinsurance ceded.

4. Underwriting Prot represents Segmental Prot / (Loss) excluding Investment Income.

5. Liquid Assets represent Cash and Cash Equivalents and Short Term Investments.

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

128 13th Annual Report 2019-20

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

Summary of Financial Statements

Annexure 3

Sr.

No.

Particulars 2019-20

(` ’000)

2018-19

(` ’000)

2017-18

(` ’000)

2016-17

(` ’000)

2015-16

(` ’000)

OPERATING RESULTS

1 Gross Written Premium 97,600,965 87,218,003 74,011,117 22,524,054 4,825,612

2 Net Premium Income 48,668,660 43,727,874 34,554,756 9,991,352 3,646,100

3 Income from Investments (net) 7,318,655 5,613,146 4,814,513 1,732,409 322,435

4 Other Income (includes provision written back) 78,665 104,959 79,176 21,305 13,788

5 Total Income 56,065,980 49,445,980 39,448,445 11,745,066 3,982,323

6 Commission (net) (2,119,040) (1,525,955) (2,684,241) (1,524,143) 91,727

7 Operating Expenses 14,809,749 11,313,294 10,544,703 4,651,511 2,137,126

8 Premium Deciency — — — — —

9 Net Incurred Claims 35,241,187 29,091,815 22,266,806 7,697,974 2,226,520

10 Change in Unexpired Risk Reserve 4,165,145 5,627,767 4,609,759 100,332 667,769

11 Operating Prot / (Loss) 3,968,939 4,939,059 4,711,418 819,392 (1,140,819)

NON-OPERATING RESULTS

12 Total Income under shareholder’s account 620,710 (266,762) 421,263 394,632 120,662

13 Prot / (Loss) before tax 4,589,649 4,672,297 5,132,681 1,214,024 (1,020,157)

14 Provision for tax 1,320,231 842,419 1,095,624 (30,070) —

15 Prot / (Loss) after tax 3,269,418 3,829,877 4,037,057 1,244,094 (1,020,157)

MISCELLANEOUS

16 Policyholders’ Account :

Total Funds

115,988,644 72,068,296 63,433,015 51,092,887 4,837,373

Total Investments (Refer note 2 (p) and

10 of schedule 16)

115,988,644 72,068,296 63,433,015 51,092,887 4,837,373

Yield on Investments 8.1% 8.2% 8.2% 6.2% 8.6%

17 Shareholders’ Account :

Total Funds 25,429,010 19,823,885 17,611,118 14,848,389 1,419,859

Total Investments (Refer note 2 (p) and

10 of schedule 16)

19,780,184 18,971,760 18,154,614 18,230,354 1,113,719

Yield on Investments 8.1% 8.2% 8.2% 6.2% 8.6%

18 Paid up equity capital 6,058,421 6,054,221 6,050,718 6,004,659 7,050,000

19 Net worth 25,429,010 19,823,885 17,611,118 14,848,389 1,419,859

20 Total Assets 25,429,010 19,823,885 17,611,118 14,848,389 1,419,859

21 Yield on Total Investments 8.1% 8.2% 8.2% 6.2% 8.6%

Earnings per Share (Basic) (`)

5.32 6.33 6.70 2.07 (1.59)

Book Value per Share (`)

41.97 32.74 29 24.73 2.01

24 Total Dividend — 1,362,200 1,210,144 — —

Dividend per Share (`)

— 2.25 2.00 — —

129

Annexure 4

A) Statement showing the Age-wise Analysis of the Unclaimed amount of Policyholders

(` ‘000)

Particulars Total

Amount

AGE-WISE ANALYSIS

0-6

months

7-12

months

13-18

months

19-24

months

25-30

months

31-36

months

37-120

months

Beyond

120

Months

Claims settled but not paid to the

policyholders/insured’s due to any

reasons except under litigation from the

insured/policyholders

—

(—)

—

(—)

—

(—)

—

(—)

—

(—)

—

(—)

—

(—)

—

(—)

—

(—)

Sum due to the insured/policyholders on

maturity or otherwise

—

(—)

—

(—)

—

(—)

—

(—)

—

(—)

—

(—)

—

(—)

—

(—)

—

(—)

Any excess collection of the premium/tax

or any other charges which is refundable

to the policyholders either as terms of

conditions of the policy or as per law or

as may be directed by the Authority but

not refunded so far

5,910

(1,467)

—

(—)

2,525

(—)

564

(—)

184

(100)

138

(26)

2,467

(1,341)

(—)

Cheques issued but not encashed by the

policyholder/insured (refer note below)

– Premium

74,936

(47,424)

—

(—)

6,543

(1,293)

2,412

(2,373)

2,179

(3,562)

3,473

(2,675)

4,192

(3,217)

55,452

(34,067)

684

(238)

– Claims – MACT 91,899

(69,313)

—

(—)

11,556

(9,454)

20,609

(16,877)

7,589

(12,445)

11,414

(7,642)

9,294

(3,895)

31, 074

(18,987)

364

(13)

– Claims – Non MACT 98,503

(110,370)

—

(—)

12,357

(23,645)

1,551

(3,840)

991

(16,732)

2,256

(5,719)

15,506

(3,481)

62,081

(55,201)

3,746

(1,752)

TOTAL 271,248

(228,573)

—

(—)

32,981

(34,391)

25,136

(23,090)

10,775

(32,739)

17,327

(16,136)

29,130

(10,619)

151,074

(109,595)

4,826

(2,003)

(Previous year’s gures are in brackets)

Note

: The Policyholder due includes amount of ` 2,280 thousand (Previous year ` 317 thousand) pertains to cheques

reissued but not encashed by the policyholder / insured.

Pursuant to Master Circular on unclaimed amount of Policy Holder due’s issued by IRDAI on July 25, 2017

the Company has considered the unclaimed amount which are payable to Policyholders remaining unclaimed

beyond six months from the settlement date or due date whichever is earlier. Accordingly there are no additions

in the unclaimed amount of Policyholder dues in the category of 0-6 months.

B) Statement showing movement of Unclaimed Amount and Investment Income as per IRDAI Circular no. IRDA/F&I/

CIR/CLD/114/05/2015 dated May 28, 2015

(` ‘000)

Particulars For the year ended

March 31, 2020

For the year ended

March 31, 2019

Opening Balance 228,256 189,329

Add: on Merger 33,523 —

Add : Amount transferred to unclaimed amount 57,723 106,329

Add : Cheques issued out of the unclaimed amount but not encashed by

the policyholders (to be included when the cheques are stale)

22,374 4,920

Add: Investment Income on unclaimed Fund 9,428 9,403

Less: Amount unclaimed paid during the year 76,725 78,943

Less: Amount transferred to SCWF (net of claims paid in respect of amounts

transferred earlier)

5,610 2,783

Closing Balance of Unclaimed Amount 268,968 228,256

“Unclaimed amount of policyholders (Investment)” ` 144,396 thousand (Previous year ` 133,798 thousand)

and “Income on Unclaimed Amount of Policyholders (Investment)” ` 39,928 thousand (Previous year ` 25,462

thousand) are disclosed under Schedule 12 – Advances and Other Assets.

Schedule – 16 (Continued)

NOTES TO ACCOUNTS

130 13th Annual Report 2019-20

Management Report

In accordance with Part IV of Schedule B of the Insurance

Regulatory and Development Authority (Preparation of

Financial Statements and Auditor’s Report of Insurance

Companies) Regulations 2002, the Management submits

the following Report:

1. We conrm the validity of Certicate of Registration

granted by the Insurance Regulatory and

Development Authority of India to transact general

insurance business.

2. To the best of our knowledge and belief, all the

material dues payable to the statutory authorities

have been duly paid.

3. We conrm that the shareholding pattern and the

transfer of shares during the year ended March

31, 2020 are in accordance with the statutory or

regulatory requirements.

4. We declare that funds of holders of policies issued

in India have not been directly or indirectly invested

outside India.

5. We conrm that the Company has maintained the

required solvency margins laid down by Insurance

Regulatory and Development Authority of India.

6. We certify that the all assets of the Company have

been reviewed on the date of the Balance Sheet and

to the best of our knowledge and belief the assets

set forth in the Balance Sheet are shown in the

aggregate at amounts not exceeding their realizable

or market value under the several headings

– “Loans”, “Investments”, “Agents balances”,

“Outstanding Premiums”, “Interest, Dividends and

Rents outstanding”, “Interest, Dividends and Rents

accruing but not due”, “Amounts due from other

persons or Bodies carrying on insurance business”,

“Sundry Debtors”, “Bills Receivable”, “Cash” and

the several items specied under “Other Accounts”

except debt securities which are stated at cost /

amortised cost .

7. The Company is exposed to a variety of risks

associated with general insurance business such

as quality of risks undertaken, uctuations in value

of assets and higher expenses in the initial years of

operation. The Company monitors these risks closely

and effective remedial action is taken wherever

deemed necessary.

The Company has, through an appropriate

reinsurance program kept its risk exposure at a

level commensurate with its capacity.

8. The Company does not have operations outside

India.

9. a. For ageing analysis of Gross Claims outstanding

(excluding provision for IBNR / IBNER and

claims relating to inward re-insurance from

terrorism pool) during the preceding ve years,

please refer Annexure 1.

b. For average claims settlement time during the

preceding ve years, please refer Annexure 2.

10. Details of payments to individuals, rms, Companies and organizations in which directors are interested during

the year ended on March 31, 2020:

Sr.

No.

Name of the Director Entity in which Director is interested Interested As Payment during

the year (` ‘000)

1 MR. DEEPAK S. PAREKH HDFC LIMITED Chairman 446,232

SIEMENS LIMITED Chairman 42

HDFC LIFE INSURANCE COMPANY LIMITED Chairman 1,016

BREACH CANDY HOSPITAL TRUST Director 32,330

2 MR. KEKI M. MISTRY HDFC LIMITED Vice Chairman

and CEO

446,232

HDFC LIFE INSURANCE COMPANY LIMITED Director 1,016

TATA CONSULTANCY SERVICES LIMITED Director 138,242

TORRENT POWER LIMITED Director 1,573

131

Management Report (Continued)

Sr.

No.

Name of the Director Entity in which Director is interested Interested As Payment during

the year (` ‘000)

3 MS. RENU SUD KARNAD HDFC LIMITED Managing Director 446,232

HDFC BANK Additional Director 2,796,680

HDFC LIFE INSURANCE COMPANY LIMITED Director 1,016

ABB INDIA LIMITED Director 6,715

4 MR. ANUJ TYAGI CSC E-GOVERNANCE SERVICES INDIA

LIMITED

Director 87,534

5 MR. BERNHARD STEINRUECKE INDO - GERMAN CHAMBER OF COMMERCE Director General 2,507

6 MR. AMEET P. HARIANI JUHU BEACH RESORTS LIMITED Director 17

7 MR. ALEXANDER ANKEL ERGO INTERNATIONAL AG Non Executive

Director

129,466

8 MR. MEHERNOSH B. KAPADIA SIEMENS LIMITED Director 42

11. We certify that all debt securities excluding Additional

Tier I Bonds and non convertible preference shares

are considered as ‘held to maturity’ and accordingly

stated at historical cost subject to amortisation

of premium or accretion of discount on constant

yield to maturity basis to the extent of policyholders

funds in the Revenue Accounts and to the extent of

shareholders funds in the Prot and Loss Account

over the period of maturity/holding.

All mutual fund investments are valued at net asset

value as at Balance Sheet date.

Equity shares actively traded and convertible

preference shares as at the Balance Sheet date are

stated at fair value, being the last quoted closing

price on the National Stock Exchange (NSE) being

selected as Primary exchange as required by IRDAI

circular number IRDA/F&I/INV/CIR/213/10/2013

dated October 30, 2013. However, in case of any

stock not being listed on NSE, the same is valued

based on the last quoted closing price on Bombay

Stock Exchange (BSE).

Additional Tier I Bond Investments are fair valued

at market yield rates published by rating agency

registered with the Securities and Exchange Board

of India (SEBI).

In accordance with the Regulations, any unrealized

gains/losses arising due to change in fair value of

mutual fund investments, listed equity shares and

Additional Tier I Bonds are accounted in “Fair Value

Change Account” and carried forward in the Balance

Sheet and is not available for distribution.

12. The Company has adopted a prudent investment

policy with emphasis on optimizing return with

minimum risk. Emphasis was towards low risk

investments such as Government securities, rated

debt instruments and liquid and Money Market

instruments in order to maintain optimum liquidity.

Investments are managed in consonance with the

investment policy laid down by the board from time

to time and are within the investment regulation and

guidelines of IRDAI. The Company has carried out

periodic review of the investment portfolio and where

found necessary, has made provision for diminution

in value of investments or written them off.

13. The Management of HDFC ERGO General Insurance

Company Limited certies that:

The nancial statements have been prepared in

accordance with the applicable provisions of the

Insurance Regulatory and Development Authority

(Preparation of Financial Statements and Auditor’s

Report of Insurance Companies) Regulations,

2002, the Insurance Act, 1938 as amended by

Insurance Laws (Amendment) Act, 2015, the

Insurance Regulatory and Development Authority

Act, 1999, circulars/notications issued by IRDAI

132 13th Annual Report 2019-20

from time to time (including Circular No. IRDA/F&A/

CIR/CPM/056/03/2016 dated April 04, 2016 and

IRDA/F&A/CIR/CPM/010/01/2017 dated January

12, 2017), the Accounting Standards (AS) specied

under Section 133 of the Companies Act, 2013,

read together with Rule 7 of Companies (Accounts)

Rule 2014 dated March 31, 2014 and Companies

(Accounting Standards) amendment Rules 2016

dated March 30, 2016 to the extent applicable

and the relevant provisions of the Companies Act,

2013, and disclosures have been made, wherever

the same is required. There is no material departure

from the said standards, principles and policies.

i. The Company has adopted accounting policies

and applied them consistently and made

judgements and estimates that are reasonable

and prudent, so as to give a true and fair view

of the state of affairs of the Company as at

March 31, 2020 and of the operating prot for

the year ended on that date.

ii. The Company has taken proper and sufcient

care for the maintenance of adequate

accounting records in accordance with the

applicable provisions of the Insurance Act,

1938, (4 of 1938) as amended by Insurance

Laws (Amendment) Act, 2015 / Companies Act,

1956, (1 of 1956)/ the Companies Act, 2013,

for safeguarding the assets of the Company

and for preventing and detecting fraud and

other irregularities.

iii. The nancial statements of the Company have

been prepared on a going concern basis.

iv. The Company’s internal audit is conducted

by an in-house audit team and an appointed

audit rm. The scope of work of internal audit

is commensurate with the size and nature of

the Company’s business. The management

has ensured that an internal audit system

commensurate with the size and nature of

business exists and is operating effectively.

Signature to the Management Report

For and on behalf of the Board of Directors

Mumbai,

Dated: November 13, 2020

Keki M. Mistry

Director

(DIN: 00008886)

Samir H. Shah

Executive Director & CFO

(DIN: 08114828)

Ritesh Kumar

Managing Director & CEO

(DIN: 02213019)

Anuj Tyagi

Executive Director & Chief Business Ofcer

(DIN: 07505313)

Dayananda V. Shetty

Company Secretary and

Chief Compliance Ofcer

(Membership No: FCS 4638)

Management Report (Continued)

133

Annexure to Management Report (Continued)

Annexure 1

Details of ageing analysis of Gross Claims outstanding

Outstanding As on 31.03.2020 (F. Y. 2019-20)

(` ‘000)

Period Fire Marine Cargo Marine Hull Motor OD Motor TP Workemens

Compensation

Public liability Product Liability Other Liabilities

No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount

0-30 days 92 407,077 248 121,707 1 15 10,712 604,204 705 221,856 66 11,270 — — — — 9 6,067

31days to 6 months 148 1,552,915 277 283,876 6 135,688 6,661 894,205 5,118 1,781,036 226 47,582 2 800 — — 52 19,807

6 months to 1 year 98 1,268,098 21 127,451 1 17,999 516 116,357 4,711 2,002,960 138 38,121 2 800 — — 37 59,946

1 year to 5 years 34 4,359,012 55 258,332 7 726,357 38 12,753 15,783 10,298,747 116 31,412 2 882 — 907 59 61,362

5 years and above 2 170,456 — 15,763 — 6,147 — — 6,034 3,110,935 5 1,994 — 400 1 64,221 3 22,396

Total 374 7,757,557 601 807,129 15 886,206 17,927 1,627,518 32,351

17,415,534 551 130,378 6 2,882 1 65,127 160 169,578

(` ‘000)

Period Engineering Aviation Personal Accident Health Home Specialty Weather/Crop Others Total

No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount

0-30 days 180 26,272 — 3,876 841 178,478 25,924 1,818,897 1 — 23 7,200 18,052 247,730 509 209,805 57,363 3,864,454

31days to 6 months 118 570,668 — 824 761 234,788 3,243 304,563 2 2,070 59 22,921 11,286 102,543 287 471,297 28,246 6,425,581

6 months to 1 year 35 472,256 7 63,990 15 12,941 273 40,495 2 495 46 282,143 18 617 22 56,532 5,942 4,561,199

1 year to 5 years 22 333,754 5 152,488 30 53,690 1,029 155,247 1 155 103 207,095 22 41 15 244,357 17,321 16,896,593

5 years and above 1 99,018 2 331,246 8 11,075 197 20,064 — — 40 26,565 245 787,445 — 265 6,538 4,667,989

Total 356 1,501,968 14 552,425 1,655 490,973 30,666 2,339,266 6 2,720

271 545,924 29,623 1,138,376 833 982,256 115,410 36,415,816

Outstanding As on 31.03.2019 (F. Y. 2018-19)

(` ‘000)

Period Fire Marine Cargo Marine Hull Motor OD Motor TP Workemens

Compensation

Public liability Product Liability Other Liabilities

No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount

0-30 days 74 170,527 517 177,521 3 885 10,775 576,290 961 453,687 161 35,973 — — — — 2 12,283

31days to 6 months 119 1,381,692 249 215,635 7 714,442 5,277 632,100 3,560 2,235,030 162 52,299 — — — — 30 53,705

6 months to 1 year 95 915,490 18 60,181 2 58,085 633 88,054 3,146 2,228,407 142 21,843 5 2,075 — 107 17 20,988

1 year to 5 years 24 4,538,649 38 197,149 3 17,664 110 25,085 14,724 10,263,020 61 17,930 2 507 — 800 52 205,200

5 years and above 4 157,108 — 14,279 1 5,527 2 1,698 3,858 2,025,014 2 455 — 400 1 64,221 2 19,146

Total 316 7,163,466 822 664,766 16 796,604 16,797 1,323,226 26,249

17,205,158 528 128,501 7 2,982 1 65,127 103 311,322

(` ‘000)

Period Engineering Aviation Personal Accident Health Home Specialty Weather/Crop Others Total

No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount

0-30 days 174 80,958 — 21,431 666 169,808 3,090 206,970 4 1,448 22 10,000 240 3,838 379 80,501 17,068 2,002,120

31days to 6 months 96 242,855 3 12,617 520 152,862 886 122,312 2 195 32 20,073 66,713 103,670 196 184,743 77,852 6,124,229

6 months to 1 year 60 279,900 5 30,109 4 6,973 28 24,372 — — 40 23,387 1,448 5,634 21 10,919 5,664 3,776,524

1 year to 5 years 29 163,605 18 244,205 — 524 4 6,116 — — 56 217,518 527 64,695 9 250,150 15,657 16,212,818

5 years and above 5 89,597 2 342,545 — — 1 1,491 — — 42 365,515 125 725,014 — 265 4,045 3,812,276

Total 364 856,915 28 650,908 1,190 330,167 4,009 361,261 6 1,643

192 636,493 69,053 902,851 605 526,579 120,286 31,927,968

134 13th Annual Report 2019-20

Annexure to Management Report (Continued)

Outstanding As on 31.03.2018 (F. Y. 2017-18)

. (` ‘000)

Period Fire Marine Cargo Marine Hull Motor OD Motor TP Workemens

Compensation

Public liability Product Liability Other Liabilities

No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount

0-30 days 109 288,722 669 86,676 2 2,506 7,990 445,409 1,063 407,981 51 7,078 — — — — 14 12,495

31days to 6 months 279 1,058,433 483 206,980 5 4,032 3,936 379,661 3,947 1,869,268 140 19,585 3 1,200 — — 16 11,444

6 months to 1 year 115 3,173,303 60 73,604 5 6,511 1,031 162,560 3,755 2,040,825 64 9,129 — — — 400 20 19,055

1 year to 5 years 39 1,765,746 38 213,830 5 26,318 489 123,020 14,543 8,321,601 78 20,215 5 1,907 — 400 49 35,736

5 years and above 1 141,282 1 44,403 — 4,184 — — 2,866 1,214,447 1 100 — 400 1 64,221 9 19,221

Total 543 6,427,487 1,251 625,494 17 43,552 13,446 1,110,650 26,174

13,854,123 334 56,107 8 3,507 1 65,021 108 97,951

(` ‘000)

Period Engineering Aviation Personal Accident Health Home Specialty Weather/Crop Others Total

No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount

0-30 days 621 56,511 3 1,503 1,235 219,528 3,651 253,983 5 831 5 3,500 697 204,084 134 51,000 16,249 2,041,808

31days to 6 months 446 212,253 5 127,547 570 275,797 1,190 203,760 10 5,392 8 3,803 790 6,372 154 143,205 11,982 4,528,733

6 months to 1 year 56 100,631 7 59,812 26 9,093 50 34,941 3 2,668 31 14,429 14 702 28 61,956 5,265 5,769,619

1 year to 5 years 42 233,130 33 219,249 4 3,277 87 63,763 — — 92 314,710 250 795,330 5 112,768 15,759 12,251,000

5 years and above — 68,097 2 340,378 — — — — — — 50 367,575 — — — 265 2,931 2,264,574

Total 1,165 670,621 50 748,488 1,835 507,694 4,978 556,447 18 8,891

186 704,018 1,751 1,006,489 321 369,195 52,186 26,855,734

Outstanding As on 31.03.2017 (F. Y. 2016-17)

(` ‘000)

Period Fire Marine Cargo Marine Hull Motor OD Motor TP Workemens

Compensation

Public liability Product Liability Other Liabilities

No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount

0-30 days 143 337,782 690 62,544 — — 7,822 505,725 1,240 226,548 32 4,318 — — — 800 11 6,105

31days to 6 months 250 791,483 363 255,051 8 76,666 3,329 325,161 3,974 1,289,453 123 18,921 3 1,600 1 400 18 6,733

6 months to 1 year 107 3,928,085 69 118,005 3 1,140 708 130,171 4,064 1,673,155 108 18,624 1 600 — — 15 74,277

1 year to 5 years 50 1,751,185 33 233,847 3 13,930 464 132,365 14,281 6,319,350 285 42,421 11 4,077 3 1,200 85 56,325

5 years and above 1 69,201 2 5,450 — 9,151 2 1,698 2,152 725,111 5 755 — — 2 65,521 3 21,209

Total 551 6,877,736 1,157 674,898 14 100,887 12,325 1,095,119 25,711

10,233,617 553 85,039 15 6,277 6 67,921 132 164,649

(` ‘000)

Period Engineering Aviation Personal Accident Health Home Specialty Weather/Crop Others Total

No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount

0-30 days 1,963 66,441 1 16,507 1,126 165,942 2,996 210,933 7 2,594 2 1,220 58 44,520 80 31,743 16,171 1,687,408

31days to 6 months 798 189,448 8 97,007 536 153,359 1,850 282,286 9 1,907 49 20,800 6 9,871 172 284,035 11,497 3,804,181

6 months to 1 year 47 188,093 3 28,369 6 2,014 157 21,363 2 2,510 36 13,420 17 294 17 24,658 5,360 6,224,777

1 year to 5 years 40 272,353 27 212,367 2 6,300 8 11,747 — — 181 267,631 254 796,215 6 35,251 15,733 10,156,564

5 years and above 1 61,325 — 299,097 — — — — — — 33 51,984 — — — 927 2,201 1,311,428

Total 2,849 777,660 39 653,347 1,670 327,615 5,011 526,328 18 7,011

301 355,055 335 850,900 275 376,613 50,962 23,184,358

135

Annexure to Management Report (Continued)

Outstanding As on 31.03.2016 (F. Y. 2015-16)

(` ‘000)

Period

Fire Marine Cargo Marine Hull Motor OD Motor TP

Workemens

Compensation

Public liability Product Liability Other Liabilities

No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount

0-30 days 38 93,798 25 5,873 — — 1,243 82,823 147 62,421 14 1,134 — — — — — 305

31days to 6 months 98 246,817 47 17,858 — — 949 134,236 473 191,914 26 5,768 — — — — — —

6 months to 1 year 44 124,562 18 21,948 — — 126 21,010 459 170,952 1 709 — — — — — —

1 year to 5 years 5 167,264 16 24,960 — — 45 17,135 1,160 468,837 1 251 — — — — — 1,990

5 years and above — — — — — — — — — — — — — — — — — —

Total 185 632,441 106 70,639 — — 2,363 255,203 2,239

894,124 42 7,862 — — — — 2 2,294

(` ‘000)

Period

Engineering Aviation Personal Accident Health Home Specialty Weather/Crop Others Total

No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount No. Amount

0-30 days 15 3,913 — — 13 1,476 370 22,723 3 209 — — — — 15 9,721 1,885 284,396

31days to 6 months 39 110,838 — — 23 6,100 112 9,011 3 30 — — — — 13 45,454 1,783 768,027

6 months to 1 year 23 16,027 — — 2 1,200 11 1,347 — — — — — — 3 4,465 687 362,219

1 year to 5 years 14 126,177 — — — — 1 14 — — — — — — 2 10,465 1,244 817,091

5 years and above — — — — — — — — — — — — — — — — — —

Total 91 256,955 — — 38 8,776 494 33,096 6 239

— — — — 33 70,104 5,599 2,231,733

136 13th Annual Report 2019-20

Annexure - 2

Details of Average Claims Settlement Time

Line of Business

F.Y 2019-20 F.Y 2018-19 F.Y 2017-18 F.Y 2016-17 F.Y 2015-16

No. of Claims Average Settlement

Time (Days)

No. of Claims Average Settlement

Time (Days)

No. of Claims Average Settlement

Time (Days)

No. of Claims Average Settlement

Time (Days)

No. of Claims Average Settlement

Time (Days)

Fire 1,762 4 1,925 87 1,645 114 920 245 693 111

Marine Cargo 12,471 5 15,068 18 12,882 44 3,742 139 492 123

Marine Hull 9 4 6 448 12 245 3 128 — —

Motor OD 487,550 2 412,047 15 274,597 21 98,738 50 35,030 31

Motor TP 3,308 29 6,885 611 8,020 557 3,196 1,014 494 551

Workemens Compensation 564 2 330 183 123 212 133 337 188 160

Public liability 4 5 — — — — — — — —

Product Liability — — — — — — — — — —

Other Liabilities 19 26 19 171 15 281 4 408 10 138

Engineering 50,330 1 27,669 7 14,409 30 2,013 304 253 223

Aviation — —

3 353 1 168 1 184 — —

Personal Accident 12,107 3 10,460 21 8,406 24 2,160 44 253 18

Health 197,022 5 152,051 12 93,388 21 24,480 39 7,607 19

Home 31 3 33 44 30 111 43 217 32 57

Specialty 14 2 10 518 7 284 2 580 — —

Weather/Crop 703,193 1 1,228,191 3 61,108 3 3,170 11 — —

Others 27,917 6 12,112 9 7,335 10 1,383 112 202 94

Total 1,496,301 1,866,809 481,978 139,988 45,254

Annexure to Management Report (Continued)

137

Glossary

Sr. No. Terms Description

1 Accretion Incremental growth over a period of time.

2 Actuary A person skilled in determining the present effects of future contingent

events or in nance modelling and risk analysis in different areas of

insurance, or calculating the value of life interests and insurance risks, or

designing and pricing of policies, working out the benets, recommending

rates relating to insurance business, annuities, insurance and pension

rates on the basis of empirically based tables and includes a statistician

engaged in such technology, taxation, employees’ benets and such other

risk management and investments and who is a fellow member of the

Institute of Actuaries.

3 Appropriations Money set aside for specic purpose.

4 Bad debts written off Bad debt expense is the amount of an account receivable that is considered

to be not collectible.

5 Book Value Per Share This is computed as networth divided by number of outstanding shares.

6 Company or We or Us Means HDFC ERGO General Insurance Company Limited (IRDAI Regn. 146).

7 Claim A request by a policyholder for payment following the occurrence of an

insured event. A claim does not necessarily lead to a payment.

8 Co-insurance Method of sharing insurance risk between several insurers. The policyholder

will deal with the Lead insurer who issues documents and collects

premiums. The policy will detail the shares held by each company.

9 Combined Ratio Incurred Claims Ratio plus Expense Ratio.

10 Commission paid Amount paid to intermediaries for acquiring business.

11 Deferred Tax Asset An asset that is used to represent lower amount of tax that a company will

have to pay in a later tax period.

12 Deferred Tax Liability A tax liability that a company owes and does not pay at the current point,

although it will be responsible for paying it in a later tax period.

13 EPS Earning Per Share (EPS) is arrived at by dividing Net Prot After Tax by the

weighted average number of shares.

14 Expense Ratio Expense ratio is a proportion of the sum of all expenses (acquisition &

operating) and net commission received on reinsurance to net written

premium expressed as a percentage.

15 Fair Value Change Account It represents unrealized gains or losses at the end of the period with

respect to listed equity securities, derivative instruments and Mutual Fund

investments.

16 Gross Written Premium (GWP) Gross Written Premium is the sum of gross direct premium and the

reinsurance premium accepted.

17 Incurred But Not Reported

(IBNR)

A reserve created by insurer and certied by an Actuary to cover the

estimated cost of losses that might have incurred but not yet reported.

18 Incurred But Not Enough

Reported (IBNER)

Losses that might have incurred but have not yet been enough reported.

19 Incurred Claims It is claims paid during the period plus the change in outstanding claims

at the end of the period versus at the beginning of the period.

20 Incurred Claims Ratio Proportion of incurred claims to premiums earned during a period.

138 13th Annual Report 2019-20

Sr. No. Terms Description

21 Industry Market Share Proportion of gross written premium of an insurer to the total gross premium

written of the General Insurance Industry - expressed as a percentage.

22 IRDAI Insurance Regulatory and Development Authority of India (IRDAI)

established under IRDA Act, 1999 to protect the interests of the

policyholders, to regulate, develop, promote and ensure orderly growth of

the insurance industry.

23 Loss on sale Loss on sale of assets when an asset is sold below its book value.

24 Net Premiums Earned Net premium written adjusted for the change in unexpired risks reserve.

25 Net Premiums Written Gross written premium less reinsurance premium ceded.

26 Net Worth Paid up share capital (+/-) reserves/ accumulated losses (-) preliminary

expenses.

27 Operating Expenses Expenses for carrying out insurance / reinsurance business.

28 Operating Prot or Loss Surplus/ Decit from carrying out insurance business activities i.e. prot

before tax excluding investment income and other income.

29 Policy The legal document issued by an Insurance Company to a policyholder

which outlines the terms and conditions of the insurance.

30 Policy Holder [Insured] A person who pays a premium to an insurance company in exchange for

the insurance protection provided by a policy of insurance.

31 Premium Deciency Premium deciency is recognised as the sum of expected claim costs,

related expenses and maintenance cost exceeds related reserve for

unexpired risks.

32 Reinsurance Transfer of an insurance (or part of the risk covered) from one insurance

company to another for a premium, not necessarily with the knowledge

of the policyholder.

33 Retention The amount of risk retained by the insurer on its own account.

34 Solvency Margin A ratio of Available Solvency Margin (ASM)/ Required Solvency Margin

(RSM) (calculated as per IRDAI Guidelines).

35 Technical Reserves Amount set aside in the balance sheet to meet liabilities arising out of

insurance contracts, including claims provision (whether reported or not)

and reserve for unexpired risks.

36 Treaty Reinsurance It means a reinsurance arrangement between the cedant and the reinsurer,

ususally for one year or longer, which stipulates the technical particulars

and nancial terms applicable to the reinsurance of dened class or

classes of business.

37 Underwriting The process of selecting applicants for insurance and classifying them

according to their degrees of insurability so that the appropriate premium

rates may be charged. The process includes rejection of unacceptable risks.

38 Unexpired Risks Reserve Portion of premium with respect to the unexpired insurance contracts as

at the end of the period.

Note: The denitions of the ratios in the glossary above are used in this report unless specically dened otherwise.

139

M139 K139

Our Products

Motor Insurance

Health Insurance

Travel Insurance

Home Insurance

Personal Accident

Retail Products Rural Products

Commercial Products

Liability Insurance

Gramin Suraksha Bima

Parivar Suraksha Bima

Cattle Insurance

Weather Insurance

Crop Insurance

 Product Liability

 Public Liability and Public Liability Act

 Errors and Omission (Tech)

 Commercial General Liability

 Workmen’s Compensation Insurance

 Professional Indemnity

Casualty Lines

 Directors and Officers Liability

 Venture Capital Asset Protection

 Employment Practices Liability

 Multimedia Liability Insurance

 Commercial Crime Insurance

 Cyber Insurance

Financial Lines

Engineering Insurance

Property Insurance

Erection All Risks Insurance

Contractor’s All Risk Insurance

Advance Loss of Profit

Contractor’s Plant and Machinery Insurance

Machinery Breakdown Insurance

Electronic Equipment Insurance

Boiler and Pressure Plant Insurance

Marine Cargo Products

Marine Specific Policy

Marine Open Policy

Sales Turn Over Policy

Standard Fire and Special Perils Policy

Consequential Loss (Fire) Insurance

Industrial All Risks Policy

Business Suraksha Classik

Accidental and Health Insurance

Group Travel

Group Mediclaim

Group Personal Accident

Group Critical Illness Insurance

Insurtech Covers

Heart Cover

Cancer Cover

Sachet Critical Illnesses

Sportify

Dynamic Flight Delay

Mosquito Disease Protection Policy

e@Secure

Ticket Cancellation Insurance

140 13th Annual Report 2019-20

M140 K140

Customer Testimonials

Excellent service. Very fast and swift service even in the hard world epidemic time. Really appreciate the service and easy

smooth technology driven claim process. Good Luck and more success to your team and HDFC ERGO.

Subodh Mahipat Marathe

Health Insurance Customer | Policy No. 2864201580641203

The best Mediclaim insurance at present. Awesome services. Will surely recommend HDFC ERGO to everyone.

Priyanka Chhajed

Health Insurance Customer | Policy No. AA01304536

Excellent processing time. No questions asked, my claim got paid within a day of my original receipts submission.

Keep it up!

Raman Prabhakar

Health Insurance Customer | Policy No. 2825100236155102

Simply Superb & Excellent Service - Cleared out all tensions from my mind.

Sathya Balamurali

Motor Insurance Customer | Policy No. 2311203209968900

I am very happy with the service of HDFC ERGO. My claim was settled within 4 days & am very Thankful for the same.

Shailendra Rajkumar Jain

Health Insurance Customer | Policy No. 2857100474983100

Delighted with efficient and prompt action and support.

Subhash Bhandakkar

Motor Insurance Customer | Policy No. 2319200942525705

141

M141 K141

Customer Testimonials

Response was better than my expectations both in terms of time taken and quality. Very impressed. Every customer

deserves this. Kudos to you guys.

Jitendra Prasad Patro

Motor Insurance Customer | Policy No. 2320100751819600

Super, prompt and to the point without wasting a minute.

Prakash Mehta

Travel Insurance Customer | Policy No. 2919100738493500

Hassle-free and smooth claim process & insurance approval. Thank you team for being there when we needed you. Great

team work.

Arpitha V

Health Insurance Customer | Policy No. 110103/11122/AA00740526-01

In the past few years, I have experienced excellent service by HDFC ERGO. Service & response is prompt & efficient. All the

best to HDFC ERGO!

Ganesh Ramayya Pengonda

Health Insurance Customer | Policy No. 2952200994219504

Excellent customer service. My earnest gratitude & appreciation for your very prompt action, that too on a Sunday. You have

exceeded my expectations!

Maria Josephine

Motor Insurance Customer | Policy No. 2311200043248209

Agent was very quick in responding. Got my query resolved in less than 5 minutes. Thank you!

Mandar Khedekar

Home Shield Insurance Customer | Policy No. 2990100712502900

142 13th Annual Report 2019-20

M142 K142

Awards and Recognitions

Insurer of the

year in Non-Life

at FICCI

Insurance Industry

Awards 2019

Best Insurance

Campaign for

Insurance Awareness

Award Junior Quiz at

FICCI Insurance

Industry Awards

2019

The Best General

Insurance

Company of the

year at

Emerging

Asia Insurance

Awards 2019

One of the Top

Innovators at the Global

Agriculture Insuretech

Innovation Challenge

hosted at the

Agriculture Insuretech

Innovation Forum

on 9

July, 2019

Mr. Hiten Kothari,

Appointed Actuary

& Head - Motor

Underwriting awarded

Actuary of the Year

General Insurance at

the 3

Insurance

Alerts Conclave &

Excellence Awards

Best Legal

Team of the

Year at the 2

Edition of Future

Legal Summit &

Awards 2019

Best Legal

Technology

Implementation of

the Year at the 2nd

Edition of Future

Legal Summit &

Awards 2019

Best Digital

Customer Experience

Insurance Company

Award presented by

the Fortis Group of

Hospitals at the

Annual Insurance/

TPA Meet

2019-20

143

M143 K143

Awards and Recognitions

ICAI Award for

Excellence In

Financial Reporting

for the 6th time!

Silver Shield in

Category V for the

FY'19

Mrs. Priya Kumar,

Head - Rural & Agri

Business awarded

the Exemplary

Leadership Award

at the International

Inspirational

Women Awards

2020

SMART General

Insurance Company

Award in the Large

Category at the 6

Edition of the

Economic Times

Insurance Summit

& 2

Insurance

Awards

E-Business Leader

– Large Company

Award at World

BFSI Congress

Awards

Best Social Media

Campaign -

#BeAFitakha

E4M Health

Marcom Awards

Best Campaign in

BFSI - #BeAFitakha

ET Kaleido Awards

2020

Most Tech Savvy

Insurance

Company Award at

World BFSI

Congress Awards

144 13th Annual Report 2019-20

M144 K144

HDFC ERGO General Insurance Company Limited

Registered & Corporate Office: HDFC House, 1

Floor, 165-166 Backbay Reclamation,

H. T. Parekh Marg, Churchgate, Mumbai – 400 020.

Customer Experience Management, Customer Happiness Center: D-301, 3

Floor,

Eastern Business District (Magnet Mall), LBS Marg, Bhandup (West), Mumbai - 400 078.

Trade Logo displayed above belongs to HDFC Ltd and ERGO International AG and used

by the Company under license. CIN: U66030MH2007PLC177117. IRDAI Reg. No.146.

+91 22 6638 3600 care@hdfcergo.com

E-mail

www.hdfcergo.com

Website