ICICI Lombard General Insurance has approved an interim dividend of Rs 4 per share for the current fiscal in the midst of a pandemic year as also the sectoral regulator asking insurers to take a conscious call on dividends due to pandemic-induced economic stress.
"We wish to inform you that the board of directors of the company at their meeting held today i.e. Friday, March 5, 2021 in Mumbai, has approved declaration and payment of interim dividend of Rs 4 per equity share i.e. at the rate of 40 per cent of face value of Rs 10 each, for FY2021," ICICI Lombard said in a regulatory filing.
Last week, the Insurance Regulatory and Development Authority of India (Irdai) had asked insurers that they may declare dividends for 2020-21 keeping in mind their capital, solvency and liquidity positions.
It also withdrew its circular April 2020, urging insurers to refrain from dividend pay-outs from profits pertaining to the financial year ended March 2020, as part of its guidelines on prudent management of financial resources in the context of Covid-19 pandemic.
ICICI Lombard said it will pay the interim dividend to those shareholders whose names appear in the record of the company/depository as on March 19, 2021. The interim dividend will be paid to shareholders on or before April 4, 2021, it added.
The withdrawal of the circular on dividend came after assessing the economic position in the insurance sector, Irdai said.
Irdai said it assessed the financial results of the insurers for quarters ended September and December 2020 and observed that the performance of the insurance companies in terms of business was gradually reviving, though at a slower pace in comparison to pre-Covid levels.
ICICI Lombard registered 6.6 per cent growth in its net profit at Rs 314 crore in quarter ended December 31, 2020.
The company's solvency ratio was 2.76x at December 31, 2020 as against 2.74x at September 30, 2020 and higher than the minimum regulatory requirement of 1.50x. It was 2.17x at March 31, 2020. The ratio is a key metric used to measure a company's ability to meet its long-term debt obligations.
Return on Average Equity (ROAE) was 22.4 per cent in 9M FY2021 compared to 21.8 per cent in year ago same period.