SBI General Insurance is a 74: 26 joint venture between the State Bank of India and Insurance Australia Group (IAG).
Ahead of initial public offering (IPO) of SBI General Insurance, its promoter State Bank of India (SBI) plans to divest up to 4% in the non-life insurer. Senior officials in the company said they plan to come out with their IPO in the next financial year.
SBI General Insurance is a 74: 26 joint venture between the State Bank of India and Insurance Australia Group (IAG). Post selling this 4% stake, India’s largest lender would have 70% stake in the non-life insurance company.
Valuations of general insurers is based in the book value and SBI General Insurance’s book value at the end of last fiscal stood at around Rs 1,500 crore.
In the past listing of ICICI Lombard General Insurance and New India Assurance, the market has seen investors giving the two insurers multiple of three to eight times to the book value for their IPOs. With similar benchmark, SBI General Insurance can be valued at Rs 9,000-12,000 crore if taken at six to eight times of book value.
“Even ICICI Lombard had sold some portion of their stake few months ahead of its IPO. We are selling up to 4% of the stake for the price discovery ahead of our IPO and process might completed in the next ten days. We plan to list the company in FY2019-20,” said a top official of SBI General Insurance on condition of anonymity.
The data from regulator Irdai show that SBI General Insurance has underwritten gross direct premium up to July this year at Rs 1,317.67 crore against Rs 847.65 crore in the previous financial year – a growth of over 55%. However, its market share as on July stands at 2.69%.
The New India Assurance is the leader in the non-life space with market share of 15.91%, while ICICI Lombard is top among the private non-life insurer with market share of 10.02% as on July 2018.
A few top categories for SBI General Insurance in terms of premium received were fire, motor, health and personal accident (PA) for the last financial year.
“The idea is to grow across all lines of the business and have a steady growth. However, we would like to have more business from health insurance, home insurance and small and medium enterprises (SME), which still remains under penetrated,” said Pushan Mahapatra, MD & CEO, SBI General insurance. For the past financial year, net profit of SBI General Insurance stood at Rs 396 crore, while its combined ratio was at 96.4%.