ICRA has assigned a long-term rating of [ICRA]AA (Stable) (pronounced ICRA double A) to the Rs. 100-crore subordinated debt programme of IndiaFirst Life Insurance Company Limited (IndiaFirst). The outlook on the long-term rating is Stable.
The rating takes into account the company’s strong promoter profile with 44% of the equity being held by Bank of Baroda (BOB; [ICRA]AAA (hyb) (Stable)1), 30% by Andhra Bank and 26% by Legal & General Group (Moody’s A3/stable). The rating factors in the track record of capital support from the promoters, the significant experience of the senior management team in the life insurance industry, robust asset quality of the investment portfolio, effective use of technology and the strong operational efficiency demonstrated by the company. The company also leverages BOB and Andhra Banks’s extensive branch network to source business at relatively lower cost through the bancassurance channel.
IndiaFirst`s importance to the parent banks is reflected through the presence of their management on the board of the company. While IndiaFirst has displayed a profitable growth over the past three fiscals, the rating is constrained by its moderate financial performance, with the company yet to achieve a significant scale of operations, market share or geographical diversification. Going forward, continued financial and operational support from the parent companies, an improvement in market share and a demonstrated ability to scale up business volume with a diversified and profitable product mix would remain key rating sensitivities.
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