Switzerland's Zurich Insurance to buy 51% stake in Kotak Gen Insurance for Rs 4,051 crore

Mumbai: Switzerland's Zurich Insurance is set to acquire a 51 per cent stake in Kotak General Insurance for Rs 4,051 crore, its parent Kotak Mahindra Bank said on Thursday.

The Swiss insurer's investment in the eight-year-old domestic company will be through a combination of fresh growth capital and share purchase, as per a regulatory filing by the listed lender.

It will follow up with an additional 19 per cent stake purchase, which will happen within three years of the initial acquisition, the filing said.

Kotak General Insurance's market share in the non-life market by premiums stood at 0.52 per cent as of September. Its gross written premium for FY23 stood at Rs 1,148.30 crore, and the share sale values the general insurance company at Rs 7,943 crore on a post-money valuation.

"India is one of the world's most important markets with immense potential, and we are pleased to be making a significant commitment with an excellent partner," Tulsi Naidu, Zurich's chief executive for Asia Pacific, said.

"The combined expertise and resources of the respective firms will enable us to provide innovative solutions to meet the evolving needs of our customers," Kotak General Insurance's managing director and chief executive Dipak Gupta said.

Kotak Mahindra group's physical and digital distribution strength and Zurich's global capabilities in digital assets and both B2C and B2B formats will benefit the company, he added.

Naidu exuded confidence that the partnership could bring innovation, know-how, and excellent customer experiences to the Indian general insurance market.

Kotak Mahindra Bank and Kotak Mahindra General Insurance Company have entered into a definitive agreement for the stake sale with Zurich Insurance Company.

The transaction is subject to regulatory approvals from the Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority of India, and the Competition Commission of India.

Kotak Mahindra General Insurance Company's chairman Gaurang Shah said the company has invested to create a multi-product franchise with strong fundamental building blocks, and hoped that Zurich will help Kotak General Insurance grow rapidly.

Post-deal, Kotak General Insurance will cease to be a subsidiary of the bank, as per the filing.

For the three months ended September 2023, the insurance company's loss narrowed to Rs 7 crore from the year-ago's Rs 17 crore. Its capital, reserves and surplus stood at Rs 379 crore as of September 30.

It can be noted that a slew of global insurers have made strong bets on the country's insurance sector ever since it was opened for foreign direct investment and have also utilised the legroom to increase their shareholding to the majority when the policy allowed them to.

Zurich is a leading multi-line insurer, having a presence in over 200 countries and territories, and its parent Zurich Insurance Group is listed on the SIX Swiss Exchange.

The Kotak Mahindra Bank share scrip was trading 1.23 per cent up at Rs 1,744.90 apiece on the BSE at 1119 hrs, as against gains of 0.69 per cent on the benchmark.