Belgian multinational insurance company Ageas yesterday announced that it has signed an agreement to acquire 40% of the share capital of Indian non-life insurer Royal Sundaram General Insurance (RSGI) for a total consideration of INR15.2bn, which is equivalent to EUR186m ($210m).
The transaction is subject to the approval of regulatory authorities, and is expected to close in the first half of 2019. After completion, Ageas will hold 40% of RSGI's share capital, Sundaram Finance (SFL), 50%, and various other shareholders, the remaining 10%.
The acquisition fits Ageas's strategy, as reconfirmed in its recently announced 3-year strategic plan Connect21, to expand its activities in fast growing markets in which it already operates, focussing on non-life insurance in particular.
RSGI is a top 10 privately owned player in the Indian general insurance market with strong positions in motor and health insurance. The company benefits from extended distribution capabilities with a nationwide network of more than 5,600 agents, 700 branches, and well-established relationships with banks and other distribution partners off- and online.
Commenting on the agreement, Mr Bart De Smet, CEO of Ageas, said, "Partnering with Sundaram Finance, a well-established company with a vast knowledge of the Indian insurance market, offers us a great opportunity to benefit from the potential of what is one of the world's largest economies with an insurance industry that is expected to grow significantly in the coming years. Being already present in the Indian life insurance market, we now will be able, through this new joint venture, to also fully grasp opportunities in the non-life market."
In his turn, Mr T T Srinivasaraghavan, managing director of SFL, said, "Over the past 18 years, Royal Sundaram has built a sterling reputation in the market for its customer service excellence, notably in claims management. The company has demonstrated strong growth in its chosen segments and is witnessing a rapid growth in its profitability. For the next phase of growth, we are delighted to be partnering with Ageas, whose global experience, including several Asian countries, will be an asset. Ageas is unique in its approach of working through local partnerships and joint ventures across Asia and we believe this can create significant value for Royal Sundaram."
RSGI is a subsidiary of SFL, a leading financial services provider based in Chennai in southern India. SFL is a listed company that offers services including general insurance, financing, mutual funds, business process outsourcing, IT services and retail distribution.
RSGI is India's first privately owned general insurance company (licensed in 2000) and currently holds the 9th position in that market segment (ex-standalone health insurers) offering innovative general insurance solutions to individuals, families and businesses directly as well as through its intermediaries and affinity partners. The company offers motor, health, personal accident, home and travel insurance to individual customers and offers specialised insurance products in fire, marine, engineering, liability and business interruption risks to commercial customers. The insurer also offers specially designed products to the small & medium enterprises and rural customers as well.
For the financial year ended 31 March 2018, RSGI generated GWP of INR26.4bn and achieved a profit after tax of INR830m, while registering an average annual growth rate of 19% and 56% in GWP and profit, respectively, between 2015 and 2018.