Ageas to acquire 40% stake in Royal Sundaram Insurance for Rs 15.2 bn

Ageas, a European insaurance major, will acquire a 40 per cent in Royal Sundaram General Insurance (Royal Sundaram) for Rs 15.2 billion. In India, Ageas is present through IDBI Federal Insurance.

Currently, Sundaram Finance holds 75.90 per cent in Royal Sundaram and seeks to divest 25.90 per cent, retaining 50 per cent of its holding after the transaction. Some of the existing Indian shareholders would hold the remaining 10 per cent in Royal Sundaram.

The transaction is subject to certain conditions, including the approval of the Insurance Regulatory and Development Authority of India (Irdai) and other regulators. It is expected to close in the first quarter of 2019.

T T Srinivasaraghavan, Managing Director, Sundaram Finance Ltd, said that over the past 18 years, Royal Sundaram has built a sterling reputation in the market for its customer service excellence, notably in claims management.

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The company has demonstrated strong growth in its chosen segments and is witnessing a rapid growth in 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," he said.

“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.”

"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," said Bart De Smet, CEO, Ageas.

Royal Sundaram is one of the top 10 players in the 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 relationships with banks and other distribution partners, off and online.

For the year ended March 31, 2018, Royal Sundaram generated Gross Written Premium of Rs 26.43 billion and achieved a Profit after Tax of Rs 830 million while registering an average annual growth rate of 19 per cent and 56 per cent in GWP and Profit respectively, between 2015 and 2018.

Royal Sundaram General Insurance Co. Limited (formerly known as Royal Sundaram Alliance Insurance Company Limited), a subsidiary of Sundaram Finance, is the first private sector general insurance company in India to be licensed in October 2000 by the Insurance Regulatory and Development Authority of India. The company was initially promoted as a joint venture between Sundaram Finance, one of the most respected non-banking financial institutions (NBFCs) in India and Royal & SunAlliance Insurance plc, UK, one of the oldest general insurer in the UK. In July 2015, Sundaram Finance acquired the 26% equity holding from Royal & SunAlliance Insurance plc. Consequently, the entire 100% equity holding is now held by Sundaram Finance (75.90%) and other Indian Shareholders (24.10%).