Tag: general insurance

Swiss Re to pick up 23 per cent stake in Paytm Insuretech for ₹920 crore

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Digital payments major Paytm on Wednesday announced that its associate, Paytm Insuretech (PIT), has entered into a strategic partnership with Swiss Re under which the reinsurer will pick up 23 per cent stake in PIT.

Swiss Re will invest (by way of equity shares and compulsorily convertible preference shares) approximately ₹920 crore (₹397.3 crore upfront and the remaining in tranches subject to fulfilment of certain milestones) in PIT for an aggregate stake of 23 per cent on a fully diluted basis.

“As part of Paytm’s financial inclusion offering, this partnership is in furtherance of the company’s mission to bring half a billion Indians into the mainstream economy,” Paytm said.

Paytm’s Vijay Shekhar Sharma (Chairman, MD and CEO of One 97 Communications) said, “We are excited to partner with Swiss Re for our insurance foray as a key strategic investor. It is an important milestone in our financial services journey to take general insurance products to the masses. We look forward to gaining from Swiss Re’s global insurance capabilities and building innovative products to tap into the Indian market.”

Swiss Re is investing alongside Paytm’s Vijay Shekhar Sharma. This follows the announcement of the acquisition of Raheja QBE by Paytm Insuretech.

The investment by Swiss Re and the acquisition of Raheja QBE by Paytm Insuretech are subject to regulatory approval.

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SBI General ties up with SahiPay to expand each in rural areas, BFSI News, ET BFSI

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New Delhi, Aug 2 (PTI) To increase non-life insurance penetration in the rural market, SBI General Insurance will tap customers of fintech player SahiPay, which provides digital and financial services in the semi-urban and rural parts of the country. SBI General Insurance on Monday announced a partnership with Manipal Business Solutions, the promoter of SahiPay.

Through this partnership, SBI General will provide a bouquet of non-life insurance solutions to SahiPay customers, the insurer said in a release.

The tie-up is a right fit to support the company’s endeavour to maximise its reach to rural segments, Pushan Mahapatra, President – Strategic Investments & Head – Open Market, SBI General Insurance said.

SBI General is continuously strengthening its distribution footprints in the country, and this tie-up is a step in that direction, the insurer said.

“SBI General Insurance will help us provide comprehensive and accessible set of insurance offerings to our customers,” Kamaljeet Rastogi, CEO, Manipal Business Solutions said.

India is predominantly rural with over 65 per cent of the population residing in rural areas and to make the rural population aware about the benefits of insurance, affordable and technology based products that provide adequate cover are required, he said. PTI KPM MR MR



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LS okays amendment in General Insurance Business (Nationalisation) Act

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The Lok Sabha on Monday approved amendments to General Insurance Business (Nationalisation) Act, 1972. This will help the government shed its shareholding in public sector general insurance companies.

Meanwhile, Finance Minister Nirmala Sitharaman has assured that the amended Bill will not take away the rights of anybody. This remark is in response to the allegation that the government is privatising insurance companies that will be against the interest of employees and policyholders.

Also read: Govt moves to shed stake in a general insurance co

“All these allegations are baseless. The government is not taking away rights of anyone. Private sector insurance companies are raising money from public and with the help of that, providing insurance products at lower premium,” she said while responding to allegations on the Bill from the opposition bench. Later the Bill got passed with voice vote.

Earlier on July 30, while introducing the Bill, Sitharaman had categorically said that apprehensions mentioned by the members are not well-founded at all. “What we are trying to in this is not to privatise. We are bringing some enabling provision so that the government can bring in public participation, Indian citizens, the common people’s participation in the general insurance companies,” she had said.

The amendment is a follow-up to the Budget announcement in which Sitharaman proposed ‘privatisation’ of one general Insurance company in the current financial year. On July 30, she said a public-private participation in general insurance industry will help get more resources which will bring in better technology infusion and also enable faster growth of such companies.

Three amendments

The Bill proposes three amendments. First one aims “to omit the proviso to section 10B of the Act so as to remove the requirement that the Central Government holds not less than 51 per cent. of the equity capital in a specified insurer”. The second one will insert a new section 24B “providing for cessation of application of the Act to such specified insurer on and from the date on which the Central Government ceases to have control over it.”

And the third one will insert “a new section 31A providing for liability of a director of specified insurer, who is not a whole-time director, in respect of such acts of omission or commission of the specified insurer which has been committed with his knowledge and with his consent.”

“With a view to providing for greater private participation in the public sector insurance companies and to enhance insurance penetration and social protection and better secure the interests of policy holders and contribute to faster growth of the economy, it has become necessary to amend certain provisions of the Act,” statement of objects and reasons of the Bill said.

As on date, there are four general insurance companies in the public sector – National Insurance Company Limited, New India Assurance Company Limited, Oriental Insurance Company Limited and the United India Insurance Company Limited. Now, Besides these, there is one re-insurer, General Insurance Corporation and one specialised one for agriculture insurance.

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All India Insurance Employees’ Association urges govt to drop United India privatisation plan

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The All India Insurance Employees’ Association (AIIEA) has opposed any move towards privatisation of United India Insurance.

“It is unfortunate that the government which had earlier decided on merger of three public sector general insurance companies has given up these plans and is now pushing for privatisation. The AIIEA demands the government to revive the plan for merger which would bring economies of scale and benefit the national economy and weaker sections of population,” the Association said in a statement on Wednesday.

Finance Minister Nirmala Sitharaman had in the Union Budget 2021-22 announced that the government would take up the privatisation of one general insurance company in 2021-22. According to reports, the NITI Aayog has recommended privatisation of United India Insurance.

Urging the government to drop any move towards privatisation of United India Insurance, the association also said it has been mobilising public opinion against the disinvestment of public sector institutions in general and public sector general insurance companies in particular.

Its units have also approached over 350 Members of Parliament on the issue.

“Insurance employees under the banner of the AIIEA are determined to carry forward the resistance against the move of the government to privatise United India Insurance Company and the public sector institutions at large,” it said.

The association also pointed out that public sector general insurance companies implement all the schemes announced by the government, including the recently announced scheme of death coverage to frontline workers due to Covid-19.

United India is the insurer for TN Chief Minister Health Insurance Scheme for 10 years and Maharashtra Government’s Mahathma Jyothiba Phule Jan Arogya Yojana Health Insurance Scheme from 2020. It has also underwritten the Prime Minister Suraksha Bima Yojana on a large scale which the private insurance companies hesitate to underwrite, the association said.

The AIIEA is of the firm opinion that privatisation of United India Insurance or any other public sector general insurance company will be antithetical to the government’s objective of Aatmanirbhar Bharat, it further said.

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HDFC Bank to buy stake worth over Rs 1,906 crore in group’s general insurer from parent, BFSI News, ET BFSI

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HDFC Bank on Saturday said its board has given its approval to buy more than 3.55 crore shares in group firm HDFC ERGO General Insurance Company for over Rs 1,906 crore from the parent company Housing Development Finance Corporation (HDFC). “The board of directors of HDFC Bank at its meeting held on June 18, 2021 has approved the purchase of 3,55,67,724 equity shares of Rs 10 each, representing 4.99 per cent of the outstanding issued and paid-up capital of HDFC ERGO General Insurance Company Ltd from HDFC Ltd,” HDFC Bank said in the filing.

HDFC is the promoter and related party of the bank.

The purchase is to happen at a price determined on an independent evaluation report, subject to receipt of necessary approvals including regulatory approvals and approval from shareholders of the bank, it said.

“The aggregate consideration for purchase of 3,55,67,724 shares of HDFC ERGO is Rs 1,906.43 crore, i.e. Rs 536 per share,” it said further.

HDFC ERGO General Insurance had a gross written premium of Rs 12,444 crore for the year ended March 2021. The company’s net worth stood at Rs 2,927 crore.

The private sector general insurer is one of the fastest growing companies among the peers with its gross written premium growing at a 35 per cent compounded annual growth rate (CAGR) over the last 13 years.

“The proposed transaction enables the bank to participate in the growth opportunity of HDFC ERGO and augment HDFC ERGO’s growth prospects leading to long-term value creation by HDFC ERGO to its shareholders,” it said.

The bank has been a distribution partner of the insurer since 2009.

The transaction, indicative to be closed by September this year, will require approval from insurance sector regulator Irdai and banking regulator RBI. Any other necessary regulatory or government approval will be evaluated prior to the share purchase agreement, HDFC Bank said.



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Magma HDI General Insurance approves capital raise of up to ₹250 crore via preferential issue

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Magma HDI General Insurance Company Ltd, the insurance JV of Magma Fincorp Ltd, has approved capital raise of up to ₹250 crore by way of preferential issue to third party investors. Pursuant to the above preferential allotment, the shareholding of the company will get reduced from the current 29.3 per cent to 24.2 per cent.

The fund-raising plan would be subject to requisite statutory and regulatory approvals.

As a part of the transaction, Magma HDI is looking to bring in funds managed by ICICI Venture and Morgan Stanley Private Equity Asia along with the Cyza Chem Pvt Ltd (a Poonawalla Group Company), and two family offices as new shareholders in the company. The transaction of ₹525 crore includes a primary capital raise of ₹250 crore.

“Fresh capital infusion of ₹250 crore will provide growth capital to meet the needs of the expanding distribution capabilities of the company. The secondary sale of ₹275 crore enables Magma Fincorp and its group companies in complying with the Reserve Bank of India’s guidelines for ownership of stake in insurance companies,” the company said in a press statement on Tuesday.

According to Rajive Kumaraswami, Managing Director & Chief Executive Officer, Magma HDI, the growth capital which the investors would bring on board would enable the company to expand the business and explore new opportunities.

“The insurance sector is poised to see exponential growth given the low penetration and the trigger of the pandemic which has led people to look at insurance as protection,” he said in the statement.

Referring to Magma HDI as a “young and fast-growing company”, Adar Poonawalla, Chief Executive Officer, Serum Institute of India, said that he was confident that it would reach its full potential in next few years.

“We are very excited with the ever-expanding opportunity in the BFSI space and with the capital infusion in Magma HDI by marquee investors and further increase by the Poonawalla group’s direct stake in the insurance arm, the company is well capitalised and poised for profitable growth and increasing its market share,” Abhay Bhutada, Managing Director & Chief Executive Officer, Poonawalla Finance, said.

Magma HDI has been clocking a CAGR of 45 per cent in the last three years. The company’s solvency stands at 1.81 times as on December 31, 2020, against the required regulatory solvency of 1.5 times. As of December 20, the investment book stands at a robust level of ₹2,881 crore.

Ambit Private Ltd is the exclusive financial advisor and Wadia Ghandy is the legal advisor to the transaction.

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Pent-up demand will come back: HDFC Ergo

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HDFC Ergo General Insurance remains optimistic about growth prospects for the general insurance sector and believes that improvement has already been evident in the third quarter of the fiscal.

“If one looks at only the third quarter data, then motor premiums have increased, private car registrations, two-wheeler registrations are back. So, next year, all the pent-up demand will come back and we will see a good year for the industry. And ,of course, we will be riding the good economic growth,” said Anurag Rastogi, President, Chief Actuary and Chief Underwriting Officer, HDFC Ergo General Insurance.

In an interaction with BusinessLine, Rastogi noted that the Covid -19 pandemic has turned health insurance into a pull product.

“As offices open up and people come to normalcy and start moving around, we see demand picking up. Look at the third quarter separately and retail health insurance has grown by 30 per cent,” he said, adding that this is fairly healthy growth.

“January, February and March is the peak period when health insurance is sold and this quarter will give some idea as to what we should expect from the coming year,” he further said.

Non-life insurers reported a 6.7 per cent growth in January this year to ₹ 18,488 crore compared to ₹17,333.7 crore in the year ago period.

Rastogi also said insurance companies are well prepared to deal with any possible second wave of Covid cases in the country.

“Insurance companies can never relax. We are prepared for whatever happens and will continue to honour our commitments to our customers,” he said.

When asked about the merger of HDFC Ergo Health Insurance (formerly known as Apollo Munich Health Insurance) with HDFC General Insurance, Rastogi said it will help scale up operations and improve delivery of products and services to customers.

“It is a union of two good institutions coming together. It brings together the knowledge of health insurance of HDFC Ergo Health Insurance, which was a wonderful institution with good products, systems and the financial strength of HDFC Ergo General Insurance,” he said.

The two had announced the completion of the merger in November 2020.

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Non-life insurers direct premium rises by 6.7 per cent in Jan

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Non-life insurance companies registered a 6.7 per cent increase in their gross direct premium collection in January at Rs 18,488.06 crore, according to the IRDAI data.

All non-life insurance companies had underwritten direct premium of Rs 17,333.70 crore in the same month last year.

Among these, 25 general insurance companies witnessed 10.8 per cent increase in their collective premium in the first month of 2021 at Rs 16,247.24 crore as against Rs 14,663.40 crore in January 2020, according to Insurance Regulatory and Development Authority of India (Irdai) data.

Five pure-play or standalone private sector health insurers, however, posted a marginal decline of 1.34 per cent in their premium underwriting at Rs 1,510.20 crore during the month as compared to Rs 1,530.70 crore a year ago.

Notably, there were seven standalone private sector health insurers, however, with the takeover of Reliance Health Insurance portfolio by Reliance General Insurance and the merger of HDFC Ergo Health Insurance with HDFC Ergo General Insurance (wef November 2020), the count decreased to five.

On a cumulative basis, gross premium written by all the non-life insurers during April-January period of FY21 grew by 2.76 per cent to Rs 1,63,670.13 crore as against Rs 1,59,275.33 crore in year ago period.

For general insurers, the cumulative premium till January 2021 rose by 1.91 per cent to Rs 1,40,999.04 crore; stand-alone health insurers witnessed 8.04 per cent increase at Rs 12,108.73 crore.

The premium of two specialised PSU insurers grew by 8.77 per cent to Rs 10,562.36 crore in January.

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Debenture holders of Reliance Capital approve asset monetisation proposal

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The debenture holders of Reliance Capital have approved the asset monetisation proposal of the company, which includes 100 per cent stake sale in its general insurance business and broking arm as well as exiting its life insurance subsidiary.

The decision was taken at a meeting of the debenture holders of Reliance Capital on January 5.

“..we wish to inform that all the resolutions have been passed by the debenture holders with requisite majority,” it said in a regulatory filing on Monday.

Also read: Reliance Capital: 10 more bids submitted

They were to consider and approve proposals for the asset monetisation process, enabling enforcement of security interest, and acknowledgement and ratification for the reimbursement of costs incurred by the debenture trustee.

The monetisation process is under the aegis of the Committee of Debenture Holders and the Debenture Trustee Vistra, which represents 93 per cent of the total outstanding debt of the company.

Reliance Capital had, on October 31, floated an expression of interest (EoI) for selling stake in its subsidiaries as part of the process to pay off its dues to creditors and become debt-free.

It plans to sell off its entire stake in both Reliance General Insurance and Reliance Nippon Life Insurance. Besides, it also plans to sell 100 per cent stake in Reliance Securities, Reliance Financial and Reliance Health.

It also proposes to sell off its 49 per cent stake in Reliance Asset Reconstruction, 20 per cent holding in ICEX as well as other PE investments like Naffa Innovations and Paytm E-Commerce.

Meanwhile, separately, Reliance Home Finance and Reliance Commercial Finance are also undergoing resolution under the IBC process, and are expected to be completed by March 31 this fiscal.

Bank of Baroda is the lead banker under the ICA resolution process for both companies.

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Edelweiss Financial Services closes ₹100-crore NCD issue early

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Edelweiss Financial Services Ltd (EFSL) has decided to close its public issue of secured redeemable non-convertible debentures (NCDs) on January 4, 2021 against the scheduled close of January 15, 2021.

EFSL’s NCD issue, amounting to ₹100 crore (base issue), with an option to retain oversubscription up to ₹100 crore aggregating to a total of ₹200 crore, opened for subscription on December 23, 2020.

The debenture fund raising committee has decided to exercise the option of early closure and to close the issue on January 4, 2021, the company said in a regulatory filing.

Also read: Mixed reactions to RBI panel proposal for conversion of large NBFCs to banks

EFSL, in a statement issued on December 21, 2020, said its NCDs offer an effective yield (cumulative) of 9.95 per cent per annum for 120 months tenure, 9.35 per cent per annum for 36 months tenure and up to 9.80 per cent per annum for 60 months tenure.

Seventy five per cent of the funds raised through this issue will be used for the purpose of repayment /prepayment of interest and principal of existing borrowings of the company.

The balance is proposed to be utilised for general corporate purposes, subject to such utilisation not exceeding 25 per cent of the amount raised in the issue, EFSL added.

Also read: Edelweiss Asset Management raises ₹6,600 crore in ESOF III

EFSL is principally engaged in providing investment banking services and holding company activities comprising development, managerial and financial support to the business of Edelweiss group entities.

It has seven lines of businesses ― corporate credit, retail credit, wealth management, asset management, asset reconstruction company, life insurance and general insurance.

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