Sources aware of the discussions said that Bharti AXA General Insurance Co. Ltd is in talks to be acquired by ICICI Lombard General Insurance Co. Ltd, in a collaboration of the insurance assets of the two companies.
In a request for anonymity, both companies are in the negotiation of the valuation of Bharti AXA, said the people familiar with the discussions.
ICICI Lombard is India’s largest private non-life insurer, possessing an 8.4% market share and owned 51.69% by ICICI Bank Ltd. In the June quarter, a gross premium of Rs 3,302.19 crore had been underwritten, 5.3% less than the same period last year. This was, however, in line with a weakness in the overall industry. By comparison, Bharti AXA General recorded a 12% year-on-year top in gross premium to Rs 508.93 crore in the quarter.
The COVID-19 pandemic continues at a large spread, creating disruption as well as an economic slowdown. This is the time at which the acquisition plans come as the general insurance industry is reeling. Letting aside standalone health insurers, the remaining existing 25 general insurers witnessed a drop of ^% in premium in the June quarter because of a steep slowdown in sales of non-life policies in the wake of a prolonged lockdown leading to a temporary halt in most commercial activities.
The first person revealed, “The two companies are still in discussion and the plan is that ICICI Lombard will acquire the entire stake of both Bharti Enterprises and AXA. Bharti AXA has a much smaller business, but the two companies are willing for the merger. The pricing has not been finalized yet.”
Bharti Enterprises currently owns 51% in Bharti AXA General, while its France-based JV partner AXA has 49%.
To be sure, Bharti Enterprises has been trying to exit its financial services business since long. In 2016, Bharti’s talks with Reliance Industries Ltd to sell its 74% stake at the time in Bharti AXA Life Insurance and Bharti AXA General Insurance were inconclusive. “There are two more general insurance companies with whom ICICI Lombard is in talks with for similar acquisitions,” said the first person.
Industry estimates suggest Bharti AXA has a market value of Rs 2,800 crore. ICICI Lombard is valued at Rs 62,827 crore. When contacted, a Bharti AXA spokesperson declined to comment. Emails sent to ICICI Lombard remained unanswered.