A. SIGNIFICANT ACCOUNTING POLICIES
1. Basis of preparation
These standalone financial statements for the
year ended March 31, 2026 are prepared and
presented under the historical cost convention
unless otherwise stated, on an accrual basis of
accounting in accordance with the generally
accepted accounting principles in India
('Indian GAAP') and in the manner prescribed
by the Insurance Regulatory and Development
Authority of India (Actuarial, Finance and
Investment Functions of Insurers) Regulations,
2024, the Master Circular on Actuarial, Finance
and Investment Functions of Insurers Ref: IRDAI/
ACTL/CIR/MISC/80/05/2024 dated May 17,
2024 ('the Master circular') and other orders/
directions/circulars issued by the IRDAI from
time to time, provisions of the Insurance Act,
1938, the Insurance Regulatory and Development
Authority Act, 1999 as amended from time to time,
practices prevailing within the insurance industry
in India and in compliance with the Accounting
Standards notified under Section 133 of the
Companies Act, 2013 and amendments and rules
made thereto, to the extent applicable and in
the manner so required. Accounting policies
have been consistently applied to the extent
applicable and in the manner so required.
Use of estimates
The preparation of the standalone financial
statements in conformity with Indian GAAP
requires that the Company's management
makes estimates and assumptions that
affect the reported amounts of income and
expenses for the year, reported balances of
assets and liabilities and disclosures relating
to contingent liabilities as of the date of the
standalone financial statements. The estimates
and assumptions used in the accompanying
standalone financial statements are based upon
management's evaluation of the relevant facts
and circumstances up to and as of the date of the
standalone financial statements. Actual results
could differ from the estimates. Any revision
to the accounting estimates is accounted for
prospectively.
2. Revenue recognition
i) Premium income
Premium income from non-linked business
including rider premium (net of Good and Service
Tax, as applicable) is accounted for when due
from the policyholders. In case of linked business,
premium income is accounted for when the
associated units are created. Premium on lapsed
policies is accounted for as income when such
policies are reinstated. Premium for products
having regular premium paying plans with limited
and / or predetermined policy term is considered
as regular premium. Premium on products other
than as mentioned above is considered as single
premium. Top up premium is considered as
single premium.
ii) Income from linked policies
Income from linked policies, which includes fund
management charges, policy administration
charges, mortality charges and other charges,
wherever applicable, is recovered from the
linked funds in accordance with the terms and
conditions of the policies and is accounted for as
income when recovered.
iii) Income from investments
Interest income on investments is accounted for
on an accrual basis.
Pre-acquisition interest paid/received to/from
counterparty on purchase/sale transaction is
debited/credited to interest accrued and not
due.
Amortisation of premium or accretion of discount
computed at the time of purchase of debt
securities is recognised over the remaining period
of maturity/holding on a straight line basis.
Dividend income is accounted for on "ex¬
dividend" date in case of listed equity and
preference shares and in case of unlisted equity
and preference shares, when the right to receive
dividend is established.
Investment income on Alternate Investment
Funds (AIFs), Real Estate Investment Trusts (REITs)
Infrastructure Investment Trusts (InvITs), are
recognized as and when declared by respective
Fund/Trust.
Fees received on lending of equity shares under
Securities Lending and Borrowing scheme (SLB)
is recognised as income over the period of the
lending on a straight-line basis.
Profit or loss on sale/redemption of equity shares/
Equity Exchange Traded funds (ETFs), Infrastructure
Investment Trusts (InvITs), Real Estate Investments
Trusts (REITs), preference shares and units of
mutual fund is calculated as the difference
between sale proceeds/redemption proceeds net
of sale expenses and the weighted average book
value as on date of sale.
I n case of other than linked business, profit or
loss on sale/redemption of equity shares/equity
ETFs, InvITs, REITs, preference shares, Additional
Tier I Bonds and units of mutual fund includes the
accumulated changes in the fair value previously
recognised under "Fair Value Change Account" in
the Balance Sheet.
In case of linked business, profit or loss on sale/
redemption of debt securities is calculated
as the difference between net sale proceeds/
redemption proceeds and the weighted
average book cost. In case of other than linked
business, profit or loss on sale/redemption of
debt securities is calculated as the difference
between sales proceeds/redemption proceeds
net of sale expenses and the weighted average
amortised cost.
iv) Interest income on loans (Including policy loans)
Interest income on policy loans is accounted for
on an accrual basis.
v) Interest income on policy reinstatement
Interest income on policy reinstatement is
accounted for on received basis and is included
in "Others" under "Other Income" in the Revenue
Account.
vi) Other Income
I nterest on income tax refund is accounted on
receipt basis post receipt of the orders from the
authorities.
3. Reinsurance premium ceded
Reinsurance premium ceded is accounted for
on due basis in accordance with the terms
and conditions of the reinsurance treaties.
Profit commission on reinsurance ceded (if
applicable) is netted off against premium ceded
on reinsurance.
4. Acquisition costs
Acquisition costs are the costs that vary with and
are primarily related to the acquisition of new and
renewal insurance contracts and consist of costs
like commission to insurance intermediaries,
rewards and incentives, sales staff costs, branch
office rent, medical examination costs, policy
printing expenses, stamp duty and other related
expenses. These costs are expensed in the period
in which they are incurred.
5. Benefits paid
Benefits paid consist of policy benefit amounts
and claim settlement costs, where applicable.
Non-linked business
Death and rider claims are accounted for on
receipt of intimation. Annuity benefits, periodical
benefit and maturity claims are accounted
for when due. Surrenders and withdrawals are
accounted for on the receipt of consent from the
insured to the quote provided by the Company.
Linked business
Death and rider claims are accounted for
on receipt of intimation. Maturity claims are
accounted for on due basis when the associated
units are cancelled. Surrenders and withdrawals
are accounted for when associated units
are cancelled. Amount payable on lapsed/
discontinued policies are accounted for
on expiry of lock in period of these policies.
Surrenders, withdrawals and lapsation are
disclosed at net of charges recoverable.
Claims receivable from reinsurance companies
are accounted for in the period in which the
concerned claims are intimated and netted off
against the benefits paid.
Repudiated claims and other claims disputed
before judicial authorities are provided for on
prudence basis as considered appropriate by
management.
6. Investments
I nvestments are made in accordance with the
provisions of the Insurance Act,1938, as amended
from time to time, the Insurance Regulatory
and Development Authority of India (Actuarial,
Finance and Investment Functions of Insurers)
Regulations, 2024, IRDAI Master Circular on
Actuarial, Finance and Investment Functions of
Insurers, 2024 and amendments made thereto
wherever applicable and various other circulars/
notifications/clarifications issued by the IRDAI in
this context from time to time.
Investments are recognised at cost on the date of
purchase, which include brokerage, stamp duty
and taxes, if any, but exclude interest accrued
(i.e. since the previous coupon date) as on the
date of purchase.
A) Classification of investments:
Investments maturing within twelve months
from the Balance Sheet date and investments
made with the specific intention to dispose them
within twelve months from the Balance Sheet
date are classified as "short term'' investments.
Investments other than short term investments
are classified as "long term" investments.
B) Valuation of investments
I. Real estate - investment property
Land or building or part of a building or both held
to earn rental income or capital appreciation
or for both, if any, rather than for use in services
or for administrative purposes is classified as
"real estate investment property" and is valued
at historical cost, subject to revaluation, if any.
Revaluation of the real estate investment property
is done at least once in three years. Any change in
the carrying amount of the investment property is
recognised in Revaluation Reserve in the Balance
Sheet. Impairment loss, if any, exceeding the
amount in Revaluation Reserve is recognised as
an expense in the Revenue Account or the Profit
and Loss Account.
II. Debt securities
a) Non-linked business, non-unit reserve
investments and shareholders' investments
Debt securities, including Government Securities
are considered as "held to maturity" and
accordingly valued at historical cost, subject to
amortisation of premium or accretion of discount,
if any, over the period of maturity/holding, on a
straight-line basis.
Money market instruments like Commercial
Papers, Certificate of Deposit, Treasury Bills
(T-Bills) and -Tri-Party Repo (TREPS) are valued
at historical cost, subject to amortisation of
premium or accretion of discount over the period
of maturity/holding on a straight line basis.
Investments in Alternative Investment Fund (AIF)
and Security Receipts are valued at cost, subject
to provision for diminution, if any, in the value
of such investments determined separately for
each individual investment. Fixed Deposits and
Reverse Repo are valued at cost.
b) Linked business
Debt securities, including Government Securities
are valued at market value, using Credit Rating
Information Services of India Limited ('CRISIL')
Bond Valuer/CRISIL Gilt Prices, as applicable.
Debt securities other than government securities
with a residual maturity of less than or equal to
182 days are valued by amortising the difference
between the last valuation price/purchase price
less redemption value over the remaining days
to maturity through CRISIL bond valuer.
Money market instruments like Commercial
Papers, Certificate of Deposits, Treasury Bills
(T-Bills) and Tri-Party Repo (TREPS) are valued
at historical cost, subject to amortisation of
premium or accretion of discount over the period
of maturity/holding on a straight line basis.
Fixed Deposits and investment in Reverse Repo
are valued at cost.
Unrealised gains or losses arising on valuation of
debt securities including Government Securities
are accounted for in the Revenue Account.
Securities with call options are valued at the lower
of the values as obtained by valuing the security
to the final maturity date or to the call option date
by using the benchmark rate based on the matrix
released by CRISIL on daily basis. In case there
are multiple call options, the security is valued at
the lowest value obtained by valuing the security
to the various call dates or to the final maturity
date. Securities with put options are valued at
the higher of the value as obtained by valuing
the security to the final maturity date or to the
put option date by using the benchmark rate
based on the matrix released by CRISIL on daily
basis. In case there are multiple put options, the
security is valued at the highest value obtained
by valuing the security to the various put option
dates or to the final maturity date. Tier II Bonds
are valued at their maturity date through bond
valuer. Securities with both put and call options
on the same day are deemed to mature on the
put and call option day and would be valued on
a yield to maturity basis, by using the benchmark
rate based on the matrix released by CRISIL on
daily basis.
III. Equity shares, Equity Exchange Traded Funds
(ETFs), Infrastructure Investment Trusts
(invITs), Real Estate Investment Trusts (REITs)
and Additional Tier I Bonds (AT1 Bonds)
a) Non-linked business, non-unit reserve
investments and shareholders' investments
Listed equity shares equity ETFs, InvITs and REITs
are valued at fair value, being the last quoted
closing price on the Primary Exchange i.e.
National Stock Exchange of India Limited (NSE) at
the Balance Sheet date. In case, the equity shares
and equity ETFs, InvITs and REITs are not traded on
the Primary Exchange on the Balance Sheet date,
the closing price on the Secondary Exchange i.e.
BSE Limited (BSE) are considered.
If the equity shares are not traded either on
the Primary or the Secondary Exchange on the
Balance Sheet date, then the price at which the
equity shares are traded on the Primary or the
Secondary Exchange, as the case may be, on the
earliest previous day is considered for valuation,
provided such previous day price is not more
than 30 days prior to the Balance Sheet date.
Equity shares lent under the Securities Lending
and Borrowing scheme (SLB) continue to be
recognised in the Balance Sheet as the Company
retains all the associated risks and rewards of
these securities.
I n case the equity ETFs, InvITs and REITs are not
traded either on the Primary or the Secondary
Exchange on the Balance Sheet date, then the
equity ETFs are valued at the latest available Net
Asset Value (NAV). In case of InvITs and REITs
where the market quote is not available for the
last 30 days, the InvITs and REITs shall be valued
at the latest NAV (not more than 6 months old) as
published by the Infrastructure Investment Trust
/Real Estate Trusts. The AT1 Bonds are valued at
market value, using applicable market yields
published by Securities and Exchange Board of
India (SEBI) registered rating agency CRISIL, using
Bond Valuer, at their call/put date.
Unrealised gains or losses arising due to changes
in fair value are recognised under the head 'Fair
Value Change Account' in the Balance Sheet.
Unlisted equity shares, listed equity shares and
unlisted equity warrants that are not regularly
traded in active markets and which are classified
as "thinly traded" as per the guidelines governing
Mutual Funds for valuation of thinly traded
securities laid down by Securities Exchange
Board of India ('SEBI') are valued at historical
cost, subject to provision for diminution, if any,
in the value of such investments determined
separately for each individual investment.
Listed equity ETFs that are not regularly traded in
the active markets and which are classified as
"thinly traded" as per the guidelines governing
Mutual Funds for valuation of thinly traded
securities laid down by SEBI, are valued at the
latest available NAV.
Bonus entitlements are recognised as investments
on the 'ex-bonus date'. Right entitlements are
accrued and recognised on the date the original
share (on which the right entitlement accrues)
are traded on the stock exchange on an 'ex¬
rights date'.
b) Linked business
Listed equity shares, equity ETFs, Infrastructure
Investment Trusts (invITs) and Real Estate
Investment Trusts (REITs) are valued and stated
at fair value, being the last quoted closing price
on the Primary Exchange i.e. the NSE at the
Balance Sheet date. In case, the equity shares,
equity ETFs, InvITs and REITs are not traded on
the Primary Exchange on the Balance Sheet date,
the closing price on the Secondary Exchange i.e.
the BSE are considered.
If equity shares are not traded either on the
Primary or the Secondary Exchange on the
Balance Sheet date, then the price at which the
equity shares are traded on the Primary or the
Secondary Exchange, as the case may be, on the
earliest previous day is considered for valuation,
provided such previous day price is not more
than 30 days prior to the Balance Sheet date.
Equity shares lent under the Securities Lending
and Borrowing scheme (SLB) continue to be
recognised in the Balance Sheet as the Company
retains all the associated risks and rewards of
these securities.
I n case the equity ETFs, InvITs and REITs are not
traded either on the Primary or the Secondary
Exchange on the Balance Sheet date, then the
equity ETFs are valued at the latest available NAV.
In case of InvITs and REITs where the market quote
is not available for the last 30 days, the InvITs
shall be valued at the latest NAV (not more than
6 months old) as published by the Infrastructure
Investment Trust/Real Estate Trusts.
Unrealised gains or losses arising on such
valuations are accounted for in the Revenue
Account.
Listed equity shares that are not regularly traded in
active markets and which are classified as "thinly
traded" as per the guidelines governing Mutual
Funds for valuation of thinly traded securities
laid down by SEBI, are valued at historical cost,
subject to provision for diminution, if any, in the
value of such investment determined separately
for each individual investment.
Listed equity ETFs, InvITs and REITs that are not
regularly traded in the active markets and
which are classified as "thinly traded" as per the
guidelines governing Mutual Funds for valuation
of thinly traded securities laid down by SEBI, are
valued at the latest available NAV.
Bonus entitlements are recognised as investments
on the 'ex-bonus date'. Right entitlements are
accrued and recognised on the date the original
shares (on which the right entitlement accrues)
are traded on the stock exchange on the 'ex¬
rights date'.
IV. Preference Shares
a) Non-linked business, non-unit reserve
investments and shareholders' investments
Redeemable preference shares are considered
as "held to maturity" and accordingly valued
at historical cost, subject to amortisation of
premium or accretion of discount.
Listed preference shares other than redeemable
preference shares are valued at fair value, being
the last quoted closing price on the Primary
Exchange i.e. National Stock Exchange of India
Limited (NSE) at the Balance Sheet date. In case,
the preference shares are not traded on the
Primary Exchange on the Balance Sheet date,
the closing price on the Secondary Exchange i.e.
BSE Limited (BSE) are considered.
If preference shares are not traded either on
the Primary or the Secondary Exchange on the
Balance Sheet date, then the price at which the
preference shares are traded on the Primary or
the Secondary Exchange, as the case may be,
on the earliest previous day is considered for
valuation, provided such previous day price is
not more than 30 days prior to the Balance Sheet
date.
Unrealised gains or losses arising due to changes
in fair value are recognised under the head 'Fair
Value Change Account' in the Balance Sheet.
Unlisted preference shares (other than
redeemable preference shares) and listed
preference (other than redeemable preference)
shares that are not regularly traded in active
markets and which are classified as "thinly
traded" as per the guidelines governing Mutual
Funds for valuation of thinly traded securities laid
down by SEBI are valued at historical cost, subject
to provision for diminution in the value, if any, of
such investments determined separately for
each individual investment.
b) Linked business
Listed preference shares are valued and stated at
fair value, being the last quoted closing price on
the Primary Exchange i.e. the NSE at the Balance
Sheet date. In case, the preference shares are not
traded on the Primary Exchange on the Balance
Sheet date, the closing price on the Secondary
Exchange i.e. the BSE are considered.
If preference shares are not traded either on
the Primary or the Secondary Exchange on the
Balance Sheet date, then the price at which the
preference shares are traded on the Primary or
the Secondary Exchange, as the case may be,
on the earliest previous day is considered for
valuation, provided such previous day price is
not more than 30 days prior to the Balance Sheet
date.
Unrealised gains or losses arising on such
valuations are accounted for in the Revenue
Account.
Listed preference shares that are not regularly
traded in active markets and which are classified
as "thinly traded" as per the guidelines governing
Mutual Funds for valuation of thinly traded
securities laid down by SEBI, are valued at
historical cost, subject to provision for diminution
in the value, if any, of such investment determined
separately for each individual investment.
V. Mutual funds
a) Non-linked business, non-unit reserve
investments and shareholders' investments
Mutual fund units held at the Balance Sheet date
are valued at previous business day's Net Asset
Value (NAV) per unit. Unrealised gains or losses
arising due to changes in the fair value of mutual
fund units are recognised under the head 'Fair
Value Change Account' in the Balance Sheet.
b) Linked business
Mutual fund units held at the Balance Sheet date
are valued at previous business day's NAV per
unit. Unrealised gains or losses arising due to
change in the fair value of mutual fund units are
recognised in the Revenue Account.
VI. Interest Rate Derivatives
Interest rate derivative (IRD) contracts for hedging
of highly probable forecasted transactions
on insurance contracts and investment cash
flows in life, pension and annuity business,
are accounted for in the manner specified in
accordance with 'Guidance Note on Accounting
for Derivative Contracts (Revised 2021) issued by
the Institute of Chartered Accountants of India
(ICAI) as revised in July 2021 and Master Circular
on Actuarial, Finance and Investment Functions
of Insurers dated May 17, 2024 as amended from
time to time and Exposure to Forward Contracts
in Government Securities (Bond Forwards) dated
March 10, 2025.
At the inception of the hedge, the Company
documents the relationship between the
hedging instrument and the hedged item, the risk
management objective, strategy for undertaking
the hedge and the methods used to assess the
hedge effectiveness. Hedge effectiveness is the
degree to which changes in the fair value or cash
flows of the hedged item that are attributable to
a hedged risk are offset by changes in the fair
value or cash flows of the hedging instrument.
Hedge effectiveness is ascertained at the time of
inception of the hedge and periodically thereafter
at Balance Sheet date.
The Forward Rate Agreement (FRA) and Bond
Forward contract is valued at the difference
between the market value of underlying bond
at the spot reference yield taken from the SEBI
approved rating agency and present value of
contracted forward price of underlying bond
including present value of intermediate coupon
inflows from valuation date till FRA or Bond
Forward contract settlement date, at applicable
INR-Overnight Interest Swap (OIS) rate curve.
The Interest Rate Futures (IRF) are exchange
traded derivative instrument and valued at
closing settlement prices published by primary
stock exchange.
The portion of fair value gain/loss on the IRD
that is determined to be an effective hedge
is recognised directly in appropriate equity
account i.e. 'Hedge Reserve' under the head
'Credit/(Debit) Fair Value Change Account''
under policyholder's fund in the Balance Sheet
and the portion of IRD fair value gain/loss
that gets determined as ineffective hedge or
ineffective portion of effective hedge, basis the
hedge effectiveness assessment is recognized
in the Revenue Account under "transfer/Gain on
revaluation/Change in Fair value.
The accumulated gains or losses that were
recognised directly in the Hedge Reserve are
reclassified into Revenue Account, in the same
period during which the income from hedged
forecasted cash flows affect the Revenue
Account (such as in the periods that income
on the investments acquired from underlying
forecasted cashflow is recognized in the Revenue
Account). In the event that all or any portion of
loss or gain, recognised directly in the Hedge
Reserve is not expected to be recovered in future
periods, the amount that is not expected to be
recovered is reclassified to the Revenue Account.
Gains or losses arising from hedge ineffectiveness,
if any, are recognised in the Revenue Account.
Costs associated with derivative contracts are
considered as at a point in time cost.
C) Impairment of investments
The Company periodically assesses at each
Balance Sheet date, whether there is any
indication of impairment of investments or
reversal of impairment loss earlier recognised.
An impairment loss is accounted for as an
expense and disclosed under the head 'Provision
for diminution in the value of investment (net)'
in the Revenue Account or the Profit and Loss
Account to the extent of the difference between
the remeasured fair value of the investments
and its weighted acquisition cost as reduced by
any earlier impairment loss accounted for as an
expense in the Revenue Account or the Profit and
Loss Account.
Any reversal of impairment loss, earlier recognised
for in the Revenue Account or the Profit and Loss
Account, is accounted in the Revenue Account or
the Profit and Loss Account respectively.
D) Provision for Non Performing Assets (NPA)
All assets where the interest and/or instalment
of principal repayment remain overdue for more
than 90 days at the Balance Sheet date are
classified as NPA and provided for in the manner
required by the IRDAI regulations on this behalf.
The Company has also provided standard
provision in line with Guidelines on prudential
norms for income recognition, asset classification,
provisioning and other related matters.
E) Transfer of investments from Shareholders'
fund to Policyholders' fund
Transfers of investments, other than debt
securities, as and when made from the
Shareholders' fund to the Policyholders' fund to
meet the deficit in the Policyholders' account are
made at the cost price or market price, whichever
is lower.
Transfers of debt securities, from the
Shareholders' fund to the Policyholders' fund are
made at the net amortised cost or the market
value, whichever is lower.
F) Transfer of investments between non-linked
Policyholders' funds
No transfers of investments are made between
non-linked Policyholders' funds.
G) Purchase and sale transactions between unit
linked funds
The purchase and sale of equity, preference
shares, ETF's, InvIT's, REITs and Government
Securities between unit linked funds is accounted
for at the prevailing market price on the date of
purchase or sale of investments, if prevailing
market price of any security is not available on
the date of transfer of investment, then the last
available price is considered.
In case of debt securities other than Government
Securities, transfer of investments is accounted at
previous day valuation price as required by IRDAI
(Actuarial, Finance and Investment Functions of
Insurers) Regulations, 2024.
7. Policyholder liabilities
The actuarial liabilities, for all inforce policies
and policies where premiums are discontinued
but a liability exists as at the valuation date, are
calculated in accordance with the generally
accepted actuarial principles and practices,
requirements of Insurance Act, 1938 as amended
from time to time, regulations notified by the
IRDAI and Actuarial Practice Standard (APS)
issued by the Institute of Actuaries of India with
the concurrence of the IRDAI.
The specific principles adopted for the valuation
of policy liabilities are set out as per the Insurance
Regulatory and Development Authority of India
(Actuarial, Finance and Investment Functions
of Insurers) Regulations, 2024 and the APS2 and
APS7 issued by the Institute of Actuaries of India.
A brief of the methodology used for various lines
of business is as given below:
. The policy liabilities are valued on policy by policy
basis, i.e. each policy is valued separately.
2. The reserves for linked business (individual and
group) comprise unit reserves and non-unit
reserves. The unit reserves are determined on
the basis of NAV of the units outstanding as at
the valuation date and non-unit reserves are
calculated using gross premium valuation
method.
3. The liabilities for individual non-linked non¬
participating and participating business are
calculated using gross premium valuation
method and are subject to the minimum floor
of surrender value. Additionally, individual non-
linked participating policies also have a reference
to the asset share of policies at valuation date.
4. The liabilities for one year renewable group
protection business are calculated on the
unexpired risk premium basis. For other than one
year renewable group protection business, the
liabilities are calculated using gross premium
valuation method.
5. The liabilities for the group non-linked savings
products are determined as the higher of policy
account balances (including accrued interest/
bonuses) and reserves calculated by gross
premium valuation method.
6. The liabilities in respect of rider benefits are
determined as the higher of unexpired premium
reserves and reserves calculated by gross
premium valuation method.
. Additional reserves are determined to:
a. allow for the claims that may have occurred
already but not yet reported (Incurred but
Not Reported)
b. allow for the servicing of existing policies if
the Company were to close the new business
one year from the valuation date (Closure to
New Business)
c. meet the expected liabilities that would arise
on the revival of lapsed policies, on the basis
of the proportion of the policies expected to
be revived based on the revival experience
of the Company (Revival Reserve)
d. allow for the additional amount required to
be paid on account of cancellation of policies
due to look in, on the basis of the proportion
of the policies expected to exercise the look-
in option based on the experience of the
Company (Look-in Reserve)
e. allow for the cost of guarantees or options,
wherever applicable
8. Borrowings
As per Accounting Standard (as) 16, "Borrowing
Costs," borrowings costs include interest and other
costs incurred by the company in connection
with borrowing of funds. Such borrowing costs
are recognised as an expense in the period in
which they are incurred.
9. Funds for Future Appropriations
The Funds for Future Appropriations (FFA),
in the participating segment, represents the
surplus, which is not allocated to policyholders
or shareholders as at the Balance Sheet date.
Transfers to and from the fund reflect the excess
or deficit of income over expenses respectively
and appropriations in each accounting period
arising in the Company's Policyholders' Fund.
Any allocation to the par policyholders would
also give rise to a transfer to Shareholders' Profit
and Loss Account in the required proportion.
The Funds for Future Appropriations (FFA),
in the unit linked segment, represents the
discontinuance charges collected from the
policies currently in discontinuance fund.
The amount is the excess of total discontinuance
charges collected over the amount set aside in
the Revival Reserve for such policies.
10. Unclaimed amount of policyholders
Assets held for unclaimed amount of policyholders
are created and maintained in accordance with
the requirement of Master circular on Unclaimed
Amount of Policyholders (version 02) IRDA/F&A/
CIR/Misc/282/11/2020 dated November 18, 2020,
amended vide Modifications to the Master
Circular Ref IRDAl/Life/CIR/Misc/41/2/2024
dated February 16, 2024, Insurance Regulatory
and Development Authority of India (Actuarial,
Finance and Investment Functions of Insurers)
Regulations, 2024 and other applicable IRDAI
regulations as amended from time to time:
a) Unclaimed amount of policyholders liability
is determined on the basis of NAV of the units
outstanding as at the valuation date and is
disclosed in Schedule 13 "Current Liabilities"
in Balance Sheet with a separate line item for
Income on unclaimed fund.
b) The Company maintains a single segregated
fund to manage all unclaimed amounts and the
sum of such fund is invested in money market
instruments, liquid mutual funds and / or fixed
deposits of scheduled banks which is valued
at historical cost, subject to amortisation of
premium or accretion of discount over the period
of maturity/holding on a straight-line basis.
Such assets of unclaimed amount of policyholders
is disclosed in Schedule 12 "Advances and Other
Assets" in Balance Sheet with a separate line item
for Income on unclaimed fund.
c) Income earned on unclaimed amount of
policyholders is accreted to respective unclaimed
fund and is accounted for on an accrual basis, net
of fund management charges and is disclosed
under the head "Interest on unclaimed amount
of policyholders" in Schedule 4 "Benefits paid" in
Revenue Account.
d) Amounts remaining unclaimed for a period of
10 years as on 30th September every year along
with all respective accretions to the fund except
the cases where funds lying in policies attached
by any law enforcement agencies are deposited
into the Senior Citizens' Welfare Fund (SCWF) as
per requirement of IRDAI regulations.
H. Fixed assets and depreciation/amortisation
Tangible assets
The fixed assets are stated at cost less
accumulated depreciation and impairment, if
any. Cost includes the purchase price and any
cost directly attributable to bring the asset to its
working condition for its intended use. Fixed assets
individually costing less than ' 5,000, being low
value assets are fully depreciated in the month
of purchase. Subsequent expenditure incurred on
existing fixed assets is expensed out except where
such expenditure increases the future economic
benefits from the existing assets. Any additions to
the original fixed assets are depreciated over the
remaining useful life of the original asset.
Depreciation/amortisation is charged on pro¬
rata basis from the month in which the asset is
put to use and in case of asset sold, up to the
previous month of sale. In respect of expenditure
incurred on acquisition of fixed assets in
foreign exchange, the net gain or loss arising
on conversion/settlement is recognised in the
Revenue Account.
The Company has adopted straight line method
of depreciation so as to depreciate the cost of
following type of assets over the useful life of
these respective assets which are as follows:
* For these class of assets, based on internal and/or
external assessment/ technical evaluation carried out
by the management, the management believes that
the useful lives (reviewed annually) as mentioned
above best represent the useful life of these respective
assets, however these are lower than as prescribed
under Part C of Schedule II of the Companies Act, 2013.
* For these class of assets, based on internal
assessment carried out by the management, the
residual value (reviewed annually) at the end of life
being very negligible is considered to be nil.
Leasehold improvements are depreciated over
the lock in period of the leased premises subject
to a maximum of five years.
Intangible assets
Intangible assets comprising of computer
software are stated at cost of acquisition,
including any cost attributable for bringing the
same to its working condition for its intended use,
less accumulated amortisation and impairment,
if any. These are amortised over the useful life of
the software using straight line method subject to
a maximum of four years. Subsequent expenditure
incurred on existing assets is expensed out except
where such expenditure increases the future
economic benefits from the existing assets, in
which case the expenditure is amortised over the
remaining useful life of the original asset.
Any expenditure for support and maintenance of
the computer software is charged to the Revenue
Account.
Capital work in progress
Cost of assets as at the Balance Sheet date
not ready for its intended use as at such date
are disclosed as capital work in progress.
Advances given towards acquisition of fixed
assets are disclosed in 'Advance and other
assets' in Balance Sheet.
12. Impairment of assets
The Company periodically assesses, using
internal and external sources of information
and indicators, whether there is any indication
of impairment of asset. If any such indication
of impairment exists, the recoverable amount
of such assets is estimated. An impairment
loss is recognised where the carrying value of
these assets exceeds its recoverable amount.
The recoverable amount is the higher of the
asset's net selling price and their value in use,
which is the present value of the future cash
flows expected to arise from the continuing use
of asset and its ultimate disposal. When there is
an indication that an impairment loss recognised
for an asset in earlier accounting periods is no
longer necessary or may have decreased, such
reversal of impairment loss is recognised, except
in case of revalued assets.
13. Loans
Loans are valued at historical cost (less
repayments), subject to adjustment for
accumulated provision for NPA, if any.
The Company has also provided standard
provision in line with Guidelines on prudential
norms for income recognition, asset classification,
provisioning and other related matters.
Loans are classified as short term in case the
maturity is less than twelve months. Loans other
than short term are classified as long term.
14. Foreign currency transactions
In accordance with the requirements of
Accounting Standard (as) 11, "The Effects of
Changes in Foreign Exchange Rates", transactions
in foreign currency are recorded in Indian Rupees
at the rate of exchange prevailing on the date of
the transaction, at the time of initial recognition.
Monetary items denominated in foreign currency
are converted in Indian Rupees at the closing
rate of exchange prevailing on the Balance Sheet
date. Non-monetary items like fixed assets, which
are recorded at historical cost, denominated in
foreign currency, are reported using the closing
exchange rate at the date of transaction.
Non-monetary items other than fixed assets,
which are recognised at fair value or other similar
valuation, are reported using exchange rates
that existed when the values were determined.
Exchange gains or losses arising on such
conversions or on settlement are recognised
in the period in which they arise either in the
Revenue Account or the Profit and Loss Account,
as the case may be.
15. Segmental reporting
Identification of segments
As per Accounting Standard (as) 17 on "Segment
Reporting", read with the Financial Statements
Regulations, the Company has prepared the
Revenue Account and the Balance Sheet for the
primary business segments namely Participating
Life (Individual & Group), Participating Pension
(Individual & Group), Non Participating Life
(Individual & Group), Non Participating Pension
(Individual & Group), Non Participating Life Group
Variable, Non Participating Pension (Individual
& Group) Variable, Non Participating (Individual
& Group) Annuity, Non Participating (Individual
& Group) Health, Unit Linked - Individual Life,
Unit Linked - Individual Pension, Unit Linked -
Group Life, Unit Linked - Group Pension. Since the
business operations of the Company are given
effect to in India and all the policies are written in
India only, this is considered as one geographical
segment.
Allocation / Apportionment methodology
The allocation of revenue, expenses, assets and
liabilities to the business segments is done on the
following basis:
a) Revenue, expenses, assets and liabilities, which
are directly attributable and identifiable to the
respective business segments, are directly
allocated for in that respective segment; and
b) Revenue, expenses which are not directly
identifiable to a business segment though
attributable, other indirect expenses, assets and
liabilities which are not attributable to a business
segment, are apportioned based on one or
combination of some of the following parameters,
as considered appropriate by the management
in adherence with the policy approved by the
board of directors :
i) Effective premium income
ii) Number of policies
iii) Number of employees
iv) Man hours utilised
v) Premium income
vi) Commission
vii) Sum assured
viii) Mean fund size
ix) Operating expenses
x) Benefits paid
The accounting policies used in segmental
reporting are the same as those used in
the preparation of the standalone financial
statements.
16. Employee benefits
A) Short term employee benefits
All employee benefits payable within twelve
months of rendering the service are classified as
short term employee benefits. Benefits such as
salaries and bonuses, short term compensated
absences, premium for staff medical insurance
(hospitalisation), premium for Employee Group
Term Insurance Scheme, Employee State
Insurance Corporation Scheme, Employee
Deposit Linked Insurance Scheme and Employee
Labour Welfare Fund Scheme are accounted for
in the period in which the employee renders the
related service. All short term employee benefits
are accounted for on an undiscounted basis.
B) Post-employment benefits
The Company has both defined contribution and
defined benefit plans.
(i) Defined contribution plans
The Superannuation Scheme, Employee
Provident Fund Scheme (Company contribution)
and the National Pension Scheme (Company
contribution) are the defined contribution
plans. The contributions paid/payable under
the plan are made when due and charged to
the Revenue Account and the Profit and Loss
Account on an undiscounted basis during the
period in which the employee renders the related
service. The Company does not have any further
obligation beyond the contributions made to the
funds.
(ii) Defined benefit plans
The Gratuity plan of the Company is the defined
benefit plan, which is a funded plan. The gratuity
benefit payable to the employees of the
Company is in compliance with the provisions
of 'the Code of Social Security 2020 which has
been implemented by the Central Government
from November 21, 2025". The present value of
the obligations under such defined benefit plan
is determined on the basis of actuarial valuation
using the projected unit credit method, which
considers each period of service as giving rise
to an additional unit of benefit entitlement and
measures each unit separately to build up the final
obligation. The discount rate used for actuarial
valuation is based on the yield of Government
Securities. The Company fully contributes the
net ascertained liabilities under the plan to the
HDFC Life Insurance Company Limited Employees
Group Gratuity Plan. The Company recognises
the net defined benefit obligation of the gratuity
plan, taking into consideration the defined benefit
obligation using actuarial valuation and the fair
value of plan assets at the Balance Sheet date,
in accordance with Accounting Standard (AS) 15
(Revised), 'Employee Benefits'. Actuarial gains or
losses, if any, due to experience adjustments and
the effects of changes in actuarial assumptions
are accounted for in the Revenue Account, in the
period in which they arise.
C) Other long term employee benefits
Other long term employee benefits include
accumulated long term compensated absences
and long term incentive plans.
Accumulated long term compensated absences
are entitled to be carried forward for future
encashment or availment, at the option of the
employee subject to Company's policies and
are accounted for based on actuarial valuation
determined using the projected unit credit
method.
Long term incentives plans are subject to
fulfilment of criteria prescribed by the Company
and are accounted for at the present value
of future expected benefits payable using an
appropriate discount rate.
Actuarial gains or losses, if any, due to experience
adjustments and the effects of changes in
actuarial assumptions are accounted for in the
Revenue Account, as the case may be, in the
period in which they arise.
17. Stock based Employee Compensation
The Company has formulated Employee Stock
Option Schemes and Performance Restricted
Stock Units Schemes, under which eligible
employees are granted options that vest in a
graded manner to acquire equity shares of the
Company. The options are accounted for on
an intrinsic value basis in accordance with the
Guidance Note on Accounting for Employee
Share based Payments, issued by the Institute of
Chartered Accountants of India (ICAI).
The intrinsic value is the amount by which the
fair value of the underlying share exceeds the
exercise price of an option on the grant date.
For all grants issued up to ESOS 2016, the fair
value of the underlying share is as determined
by an independent valuer. The fair market price
in case of all grants issued after ESOS 2016 is
the latest closing price, immediately prior to the
grant date, on the stock exchange on which the
shares of the Company are listed. If the shares
are listed on more than one stock exchange, then
the stock exchange which records the highest
trading volume on the date, immediately prior to
the grant date is considered.
The intrinsic value of options, if any, at the
grant date is amortised over the vesting period.
after adjusting estimated forfeiture. The same
is recognised in the Revenue Account under
Operating Expenses with a corresponding credit
to Employee Stock Options Outstanding Reserve.
On exercise of the stock options, corresponding
balance in Employee Stock Options Outstanding
Reserve is transferred to Share Premium.
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