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Mergers & Acquisitions | 27 June 2014

RSA May Exit Indian Insurance JV To Sundaram Finance

by Sejal Mourya
 
@Sejal

Insurance MNC RSA Insurance Plc is looking at exiting its Indian insurance business housed under the JV @Royal_Sundaram Limited, selling its stake to partner @Sundaram_Finance_L Limited.

Also Sundaram is also planning sell stake to a overseas player. For RSA it would be a part of the global strategy wherein it would be exiting non core areas, Sundaram is seeking to acquire the stake at a discount and induct a new partner, as valuations of insurance firms rise in anticipation of a further relaxation of foreign direct investment norms in the sector, to revive the operations of its unit.

Established in 2000 74:26 JV between Sundaram Finance and RSA Insurance which covers motor, travel, health, home and accidents has been the only insurer among the top10 to see a decline in growth and market share.

Royal Sundaram’s market share shrunk from 2.26% to 1.85% with its gross premium underwritten being at INR 143.7 Mn on 31 March, compared with INR 156.1 Mn a year ago.

It was the first private non-life insurance company licensed to operate in India.

London headquartered RSA major with operations in the UK, Ireland, Scandinavia, Central and Eastern Europe, Canada, Asia, the Middle East and Latin America was seeking to exit its businesses in Poland, Latvia, Lithuania and Estonia.

It was also planning to sell its Canadian brokerage business.

Since 2012, some foreign insurers have exited India. ING had sold its stake in the JV to Exide Industries; New York Life Insurance Co. sold its stake in Max New York Life Insurance Co. Ltd to Japan’s Mitsui Sumitomo Insurance Co. Also Aviva was planning to sell its stake in the JV with the Dabur Group.

On the other hand many Indian player were planning an insurance foray:

  • Religare Health Insurance Company Limited was in talks with PE investors like Leapfrog Investments Limited, General Atlantic LLc and TPG Capital for stake sale.
  • The AV Birla Group was in talks with a South African health insurance company where it would likely hold 74% stake in the proposed joi
  • Muthoot was looking for a foreign partner to enter the insurance sector through a JV.nt venture.



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