Canada's Fairfax ups stake in ICICI Lombard
Canada-based Fairfax Financial Holdings has agreed to buy an additional 9% of ICICI Lombard General Insurance from ICICI Bank for approximately $234 million.
On completion of the transaction, Fairfax will own a 35% stake in the business, with ICICI Bank holding 64%. The deal values ICICI Lombard at $2.6 billion. Fairfax, which is also a shareholder in ICICI Bank, is one of a number of groups to increase its exposure to India's insurance sector following a decision to allow individual overseas investors to own 49% in a domestic insurance company, up from the previous cap of 26%.
The company was set up as a joint venture between ICICI Bank and Fairfax in 2001, and claims to be the largest private sector general insurance business in India. It offers personal, health, motor, travel, liability, credit, fire and marine insurance solutions, among others.
ICICI Lombard had gross written premiums of INR69.1 billion ($1.01 billion) for the year ended March 2015. It has issued more than 13.9 million policies and settled in excess of 3.4 million claims. The company has approximately 5,700 employees and 260 branches.
"The transaction reflects ICICI Lombard's position as the leading private sector general insurer in India, the substantial potential for profitable growth of the business and the strong relationship between the joint venture partners," ICICI Bank and Fairfax said in a joint statement.
Fairfax is a holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and investment management. Earlier this year it raised $1 billion for an India investment unit through a combination of an IPO and a private placement.
In July, the Fairfax India subsidiary offered to buy a 26% stake in IIFL Holdings, a financial services company backed by The Carlyle Group, for INR16 billion. Fairfax already holds a 9% interest in IIFL directly and has a seat on the company's board.
The ICICI Lombard deal is subject to regulatory approval and is expected to close in the first quarter of 2016.
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