Zurich Insurance—one of Europe’s largest insurers —is in talks to buy up to 51% stake in Kotak General Insurance, a fully-owned subsidiary of Kotak Mahindra Bank, Reuters reported Wednesday.
In early-stage negotiations, Kotak General Insurance is valued at around $800 million, and Zurich Insurance has expressed interest in both a minority stake of 49% or taking up a majority 51% stake, the Reuters report said quoting sources.
The Swiss insurer wants to secure stake worth around $400 million, the report said.
If the talks culminate in a deal than it would mark Zurich Insurance’s first major bet on the fast-growing South Asian insurance market.
Kotak is still evaluating offers, including from other investors, but it prefers retaining “control of the company” after the stake sale, the report said.
A spokesperson for Zurich Insurance said, “as a matter of principle, we don’t comment on market rumours and speculations.”
More than 30 companies operate in the general insurance market in India, where annual premium collections grew 11% to reach $26.7 billion in 2021-22, helped by rising financial literacy and income levels, CareEdge Ratings said in a report.
CareEdge added that India remains a vastly underpenetrated market with non-life insurance penetration of 1% in 2021, compared with the global average of 4.1%, highlighting “the potential of the industry.”
Foreign companies like Allianz of Germany and Lombard from South Africa already have general insurance partnerships with Indian banking or financial groups.
Kotak, which is a relatively smaller general insurance player, is holding stake sale talks as it hopes to get an investor who can help them “turn around the business and grow faster”, the report said.
The Kotak unit reported a loss of $10 million and clocked a premium income of $91.35 million in 2021-22, when bigger rival HDFC Ergo garnered $1.66 billion.
Zurich, which operates in more than 200 countries, said in 2017 that it wanted to grow its presence in markets such as China and India, where it can “compete without being a dominant player”.
India in 2021 relaxed foreign investment rules for the insurance sector, allowing companies to acquire majority stakes of up to 74%, from 49% earlier.
