HDFC Ergo General Insurance arm of
mortgage lender HDFC has acquired L&T General Insurance for Rs 551 crore,
the first such consolidation in India’s crowded general Insurance sector having
27 players. L&T General Insurance reported gross earned premium of Rs 483
crore for the last financial year which puts the deal value at 1.14 times of
the GEP.
The combined size and expertise
will result in improved cost efficiencies in the merged entity and benefit
policy holders and other stakeholders. L&T General Insurance is a wholly
owned subsidiary of infrastructure and engineering major Larsen & Toubro. The
move marks an exit from the insurance business for the infrastructure behemoth.
The company received license to operate general insurance in 2010 and it has
not been able to break even since then.
The company is also believed to be
in discussion to dilute its holding in its mutual fund business L&T Mutual
Fund. L&T General Insurance is among the few companies in the sector
without a foreign partner. The Insurance Laws Act of 2015 has allowed FDI up to
49 percent in insurance companies. HDFC Ergo is a joint venture between HDFC
and Germany based ERGO Insurance group.
HDFC Ergo, a 51:49 joint venture
between housing finance major HDFC and global insurance major ERGO
International Germany, is the fourth largest private sector general insurer in
India.
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