ZURICH SECURES MAJORITY SHARE OF KOTAK INSURER WITH 51% ACQUISITION

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Zurich Insurance Company Ltd is set to acquire a 51% stake in Kotak General Insurance for an investment of Rs 4,051 crore, in accordance with Google AdSense policy.

Zurich Insurance will also have the option to purchase an additional 19% stake within a three-year period following the initial acquisition. The proposed transaction places a post-money valuation of Kotak General at Rs 7,943 crore, subject to customary closing adjustments.

The anticipated completion date for the 51% stake acquisition is June 30, 2024, pending standard conditions, including approvals from regulatory bodies such as the Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority of India (IRDAI), and the Competition Commission of India (CCI).

Kotak Mahindra Bank has disclosed that once Zurich Insurance takes the majority stake, its insurance arm will no longer be its subsidiary.

Kotak General reported a gross written premium of Rs 1,148.30 crore in the 2022-23 fiscal year, with a net worth exceeding Rs 341 crore during that period.

Tulsi Naidu, Zurich’s chief executive for Asia Pacific, expressed optimism, stating, “India is one of the world’s most important markets with immense potential, and we are pleased to be making a significant commitment with an excellent partner.”

Kotak General’s Managing Director and Chief Executive, Dipak Gupta, highlighted the collaborative potential, explaining, “The combined expertise and resources of the respective firms will enable us to provide innovative solutions to meet the evolving needs of our customers.” He also emphasized the synergy between Kotak Mahindra’s distribution network and Zurich’s global digital capabilities, which would benefit the company.

Emkay Global analyst Avinash Singh pointed out the strategic importance of this move, saying, “This development is just a matter of getting access to India, one of the key growth markets. To start from scratch, it would have taken much longer to build a brand visibility.” He also noted that while Kotak General may not be a top player in the sector, the Kotak brand itself provides Zurich with a solid foundation.

Kotak General Insurance faces competition from larger competitors such as HDFC ERGO and Bajaj Allianz, both of which also have foreign insurers as investors.

The shares of Kotak Mahindra Bank saw a modest increase, closing at Rs 1,737, representing a 0.77% rise over the previous closing price.

Chairman of Kotak Mahindra General Insurance, Gaurang Shah, highlighted the company’s strong fundamentals and multi-product franchise. Notably, the insurance company reduced its losses from Rs 17 crore in the year-ago period to Rs 7 crore for the three months ending September 2023.

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