Universal Sompo, Japan’s second-largest insurer, will increase its stake in the general insurance joint venture with Indian banks to 49 per cent from 26 per cent. The development will result in Indian shareholders diluting their stake or exiting the Universal Sompo General Insurance company.
The move comes after the government increased the foreign direct investment cap in the insurance sector to 49 per cent from 26 per cent.
Kolkata-based Allahabad Bank is the largest shareholder in the venture with 30 per cent stake, followed by Indian Overseas Bank (19 per cent), Karnataka Bank (15 per cent). The Dabur group owns the remaining 10 per cent.
Allahabad Bank has decided to appoint a consultant to advice them whether to exit or only dilute its stake.
“Allahabad Bank to float Request for Proposal (RFP) for appointment of consultant for advising and undertaking redrafting of existing Shareholders Agreement of the insurance Joint Venture — Universal Sompo General Insurance Company, so as to align the same with amended Indian Insurance Laws,” the bank informed the exchanges.
“The Board of Directors may also deliberate on partial/complete disinvestment of its stake in the said insurance joint venture,” the bank statement said.
The insurance company has collected a gross direct premium of Rs 700 crore in 2014-15, which is 30 per cent growth over the previous year. The insurer reported a profit of Rs 19 crore in the previous financial year, while in the first half of this fiscal, profits were Rs 20 crore. The company is expected to double its profit this fiscal.
Recently, ICICI Bank — the largest private sector lender in the country — decided to sell 9% stake in ICICI Lombard General Insurance, to its foreign partner, Prem Watsa-promoted Fairfax Financial Holdings. The deal values the general insurance company at Rs 17,225 crore.
The Kolkata-based lender has also decided to merge its merchant banking arm AllBank Finance with the bank.
