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Swiss Re, Zurich offered stake in IAG’s Indian venture, say sources

19th February 2019 - Author: Matt Sheehan

Swiss Re, Zurich Insurance, Gen Re and Liberty General are among a group of almost 40 companies who have been approached to buy out Insurance Australia Group’s (IAG) 26% stake in SBI General Insurance, according to sources at The Economic Times.

India map and flagIAG is reportedly seeking Rs 3,400 crore (US $476 million) for the sale of its holding in India’s SBI General Insurance, which it launched in 2010 as a joint venture with the country’s state bank.

The sale would form part of the Australian insurer’s restructuring of its Asia Pacific operations, which has already seen it exit markets in Indonesia, Thailand and Vietnam.

Other parties including private equity firms Apax, Advent, Blackstone Group, Warburg Pincus and KKR, Canada Pension Plan Investment Board, sovereign wealth funds Abu Dhabi Investment Authority and Temasek, and existing investor Premjilnvest have also been approached regarding the sale, sources said.

“Close to 40 potential suitors have been sounded out, including Warren Buffett’s General Reinsurance Corp (Gen Re),” a person familiar with the matter told The Economic Times.

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“Most global players are already here but there are some Europeans who would still explore getting a toehold in India,” they added. “Even Premji, who has a small stake, has been tapped to see if they want to increase their exposure.”

Non-binding bid submissions started earlier this month, sources confirmed, and Goldman Sachs has been mandated to run the official sale process for IAG.

SBI General Insurance reported a 53% increase in net profit to RS 89 crore (US $12.5 million) in Q4 2018 and a 150% increase in annual revenue to Rs 400 crore (US $56 million) for the full year.

It currently has a presence through 23,000 branches of the State Bank Group and over 5,500 regional rural banks and offers motor, health, personal accident, travel and home insurance in the retail space and aviation, fire marine, construction, engineering and liability insurance in the commercial space.

State Bank of India sold 4% of its 76% stake in the venture to Axis Asset Management and Premjilnvvest in September 2018 for Rs 482 crore (US $67.5 million) in what was seen as a price discovery exercise ahead of a planned initial public offering (IPO), The Economic Times noted.

For reinsurers such as Swiss Re and Gen Re, who each obtained a licence to open Indian offices in 2017, an investment in SBI General Insurance could give them a firm footing in the Indian market.

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