Zurich Insurance Company Ltd. has completed the acquisition of a 70% stake in Kotak Mahindra General Insurance Co. Ltd. for US$670 million – marking the largest foreign investment in India’s general insurance market.

“The transaction marks the largest foreign investment in India’s general insurance market and is the first by a foreign insurer since the foreign direct investment (FDI) limit was raised from 49% to 74% in 2021,” Zurich said in a statement.

The purchase of Kotak General Insurance from Kotak Mahindra Bank Ltd. was completed with a combination of fresh growth capital and share purchase, the insurer said, noting that the business eventually will adopt a new brand that represents both Zurich and Kotak as shareholders.

India’s general (property/casualty) insurance market “is poised for substantial growth, driven by greater consumer awareness of the benefits of insurance, continued development of digital and financial infrastructure, and a large and growing middle class,” Zurich added. “The strong growth in India’s SME and corporate sectors will see demand for commercial insurance solutions.”

“The acquisition of Kotak General Insurance sets the way forward for Zurich to be a leading player in a very significant growth market – India. This is a key strategic step for Zurich,” said Tulsi Naidu, CEO, Asia Pacific, Zurich Insurance Group.

The new combined company “will unlock the next phase of growth for Kotak General Insurance and create a leading non-life insurance franchise that will focus on technology and scale, while prioritizing customer needs,” commented Shanti Ekambaram, deputy managing director, Kotak Mahindra Bank.

“This milestone marks a pivotal moment for us and will catalyze our expansion in the market by offering comprehensive solutions tailored to meet the evolving needs of our diverse customer base,” according to Suresh Agarwal, managing director and CEO, Kotak General Insurance. “This is a major stride in advancing our mission of enhancing insurance penetration in India through technology, scale, and bringing global best practices to our business to provide value-adding experiences to our customers.”

The transaction was originally announced in November 2023 and was subject to regulatory approvals from the Reserve Bank of India, Insurance Regulatory and Development Authority of India, and the Competition Commission of India. All necessary approvals have been received.

In the original deal, Zurich had agreed to buy a 51% stake Kotak General Insurance Co. for $487 million through a combination of fresh capital and share purchase. The insurer had planned to acquire an additional stake of up to 19% over time but that plan was accelerated.

Source: Zurich Insurance

Topics
Mergers & Acquisitions