IndiaFirst Life Insurance Company Ltd IPO

Last Updated on September 27, 2023 by BFSLTeam BFSLTeam

The Mumbai-based IndiaFirst Life Insurance Company ltd has received the green signal to launch its IPO from India’s market regulator Securities and Exchange Board of India. With this, the life insurance company is all set to launch its public issue.

This IPO will consist of both a fresh issue and an Offer for Sale. The fresh issues will be worth Rs. 500 crore while the OFS will consist of a maximum of 14,12,99,422 equity shares. Bank of Baroda will offer about 8,90,15,734 shares joined by Carmel Point Investments and Union Bank of India, contributing 3,92,27,273 and 1,30,56,415 shares, respectively. 

Now, let’s learn more about the company and its financials to make a sound investment decision. 

Also Read: IPO investment strategy

About the Company 

IndiaFirst is a private life insurance company backed by the Bank of Baroda and the Union Bank of India. Despite being one of the newest insurance providers, it is also one of India’s fastest-growing insurers. 

The company recorded the highest growth in New Business Individual Rated Premium (IRP) among all PSU-funded insurers from FY2017 to FY2022. In the five-year period, it recorded a 27.3% CAGR growth. This is much higher than the industry growth rate of 13.9% during this time.

The company provides 9 participating products, 29 retail products, 16 non-participating products, 13 group products and 4 ULIPs. It has 58,610 retail products and 13,47,856 group policies as of June 30 2022.

Being one of the fastest-growing life insurers in India, they have been promoted by two of the significant public sector banks. They have over 5132 branches across India including 8 regional rural banks in association with BoB and UBI. 

The insurance company aims to provide products as per the needs of its customers. Hence, its product portfolio consists of various products ranging across different individuals and their life stages. It also offers policies under the PMJJBY (Pradhan Mantri Jeevan Jyoti Bima Yojana) scheme. 

Company Financials 

Take a look at the company’s financials to get an idea about how it has been performing financially. The table below lays down the details: 

Parameters As Per the Year Ending on	31 March 2022	31 March 2021	31 March 2020
Total Assets	1,94,514.90	1,72,956.33	1,49,437.75
Total Liabilities	1,94,514.90	1,72,956.33	1,49,437.75
Total Expenses	7,212	5,755	5,095
Total Revenue	72,053.09	65,190.84	35,998.07
Profit After Tax	(2,816.20)	301.89	(974.15)
EBITDA	(2,567.22)	617.86	(678.45)
Earnings Per Share (Basic and Diluted)	(4.24)	0.46	(1.55)

*Parameters expressed in Rs. millions except EPS 

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Strengths 

Knowing the factors that have made the company earn significant profits and stand out from its contemporaries will give confidence to potential investors. Here are some such facts about IndiaFirst Life Insurance Company ltd.: 

• India’s life insurance market holds the position of ninth largest in the world and fourth largest in Asia in terms of life insurance premiums as per the latest CRISIL report. Various indicators, including insurance density, penetration, and protection gap, show that the Indian life insurance market remains underinsured, indicating significant growth potential.
• The company benefits significantly from its relationship with one of its promoters, BoB, which is the third largest public sector bank in India as of March 31, 2022. The association with BOB and UBI gave the company access to a total of 260 million customers through 17,587 branches across India.
• The company believes that its diverse product portfolio contributes significantly to business growth. The product range caters to both retail and corporate customers with a focus on items with a higher margin. The company profiles customers based on occupation, lifestyle, financial demographics and needs.
• Significant technology investments have been made to improve sourcing and streamline business processes, including lead generation, customer acquisition and the entire customer lifecycle. In addition, its underwriting process is increasingly automated to optimise efficiency and resource utilisation.

Risks Involved 

Along with its strengths, there are also a few risks involved which are integral to the company’s operation. They are as below: 

• Market risk, the potential for losses of invested capital due to fluctuations in market prices driven by factors such as interest rates, stock prices, exchange rates and relevant market prices, is managed by the Company through strategic investments in major indexed securities. Other risk mitigation measures include matching asset and liability types and duration and optimizing cash flow matching where possible.
• The company manages interest rate risk by monitoring the duration of assets and liabilities and conducting stress tests to mitigate costs of funding. However, unexpected insurance claims, potential losses due to cash flow mismatches and fluctuations in asset and liability values can result in losses despite the measures taken. 

Also Read: Risk of investing in IPO

Summary 

The Mumbai-based insurance company had earlier filed its preliminary documents with SEBI on October 21 2022. It aims to raise funds of a maximum of Rs. 500 crore to enhance its capital base to increase its solvency. IndiaFirst Life Insurance Company ltd. became the 3^rd insurance company to file DRHP following GoDigit and Life Insurance Corporation of India on October 21. 

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