Kotak Mahindra Bank announced on Thursday that Zurich Insurance of Switzerland will invest Rs 4,051 crore to acquire a 51% stake in Kotak General Insurance through a combination of growth capital and the purchase of fresh shares.
In a regulatory filing, the bank said that the proposed transaction values Kotak General Insurance at Rs 7,943 crore. Further, Zurich will acquire an additional stake of 19 per cent within a period of three years from its initial acquisition.
Zurich’s investment represents the single largest investment by a global strategic insurer in an Indian non-life insurer. The transaction is expected to be completed by June 30, 2024.
The company will invest Rs 1,609 crore in the general insurer as fresh growth capital.
Kotak General Insurance received the license to start the business from Insurance Regulatory and Development Authority of India (Irdai) in 2015. It offers a wide range of non-life insurance products like motor, health, home insurance. In 2022-23 (April-March), the general insurer posted a gross written premium of Rs 1,148.3 crore. It has a paid up equity capital of Rs 680 crore.
The insurer’s market share in the non-life market by premiums current stands at around 0.52%. Its net loss widened to Rs 117.3 crore in 2022-23 from nearly Rs 83 crore a year ago. Total net claims incurred rose to Rs 460.6 crore as on March 31 from Rs 367.4 crore a year ago.
The transaction will allow Zurich Insurance to leverage the Kotak Mahindra Bank’s franchise of around 1,780 branches.
Kotak Mahindra Bank, Kotak General Insurance, and Zurich Insurance group have entered into definitive agreements for the transaction, which represents the single largest investment by a global strategic insurer in an Indian non-life insurer.
Kotak General Insurance will cease to be a subsidiary of Kotak Mahindra Bank once Zurich Insurance acquires the 51% stake. “Kotak Mahindra Group’s pan-India ‘phygital’ distribution presence and Zurich’s distinct global capabilities in digital assets, B2B and B2C formats has potential to create a transformational ‘digical’ impact for the Kotak General Insurance franchise,” says Dipak Gupta, Managing Director and Chief Executive Officer, Kotak Mahindra Bank.
The transaction between these entities is subject to approvals from the Reserve Bank of India (RBI), Irdai, and Competition Commission of India (CCI).
Zurich Insurance, a subsidiary of Zurich Insurance group, caters to people and businesses in more than 200 countries and territories. Zurich Insurance Group is listed on the SIX Swiss Exchange.
“The alliance marks a significant step forward in further implementing our strategy to deepen insurance penetration in India with an appropriate combination of technology, scale and a tangible commitment to the customer,” Gaurang Shah, Chairman, Kotak Mahindra General Insurance said.
Zurich Insurance Asia Pacific Chief Executive Officer Tulsi Naidu noted that this partnership can bring strong innovation, know-how, and excellent customer experiences to the Indian general insurance market.