Ageas Insurance International N.V. (Ageas) and Sundaram Finance Ltd (SFL) along with other Indian Shareholders announced today that they have signed an agreement whereby Ageas will acquire 40% of the share capital of Royal Sundaram General Insurance Co.
Limited (Royal Sundaram) for a total consideration of Rs.1520 cr. Currently Sundaram Finance Ltd holds 75.90% in Royal Sundaram and proposes to divest 25.90%, thereby retaining 50% of its holding, post the divestment. Some of the existing Indian shareholders will hold the balance 10% in Royal Sundaram.
Royal Sundaram is a top 10 player in the privately owned 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 and 700 branches (consisting of its own branches and that of SFL) and well-established relationships with banks and other distribution partners, off and online.
For the year ended 31 st March 2018, Royal Sundaram generated Gross Written Premium of Rs. 2643 cr. and achieved a Profit after Tax of Rs. 83 Cr. while registering an average annual growth rate of 19% and 56% in GWP and Profit respectively, between 2015 and 2018.
Commenting on the agreement, T.T Srinivasaraghavan, Managing Director, Sundaram Finance Ltd., 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 in 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.”
The transaction is subject to certain conditions to close including the approval of the Insurance Regulatory and Development Authority of India (IRDAI) and other Regulators. The transaction is expected to close in the first quarter of 2019.
Commenting on the agreement, Bart De Smet, CEO, 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 to also fully grasp opportunities in the Non-Life market. We are confident that Ageas’s insurance expertise combined with Sundaram Finance’s market knowledge and position will take Royal Sundaram to a next level in terms of size and profitability.”