Berger sells 75% insurance arm stake

Principal Group (PG) has acquired 26 per cent, while Punjab National Bank (PNB) has bought another 30 per cent. Vijaya Bank (VB) on the other hand has acquired another 19 per cent in the company which has now been rechristened PNB Principal Insurance Advisory Company Ltd.

Berger Paints' insurance venture had hit a roadblock some time back with IRDA suspending its license "" the insurance broking company it acquired a few months ago. The apex body had also questioned Berger's capability of fulfilling conditions for holding a license as specified under IRDA.

Having invoked its suspension, IRDA today said that it had suspended its broking license because AISP sold its entire shareholding to Berger Paints India Ltd without the former's prior approval. Berger Paint had acquired AIS in a bid to enter the insurance sector but AIS failed to inform IRDA before the acquisition following which IRDA suspended its license.

"Subsequent on suspension of license, Berger Paints approached IRDA for revival of insurance broker license. They also requested for Authority's approval for the name change of the broking company from Avani Insurance Services to PNB Principal Insurance Advisory Company to reflect the changes in broking company after its takeover. The new name was duly approved by the Authority," said IRDA.

PNB Principal Insurance Advisory Company will now undertake normal activities as a direct insurance broker with immediate effect.

The paint major had acquired Avani to further its insurance business which it was planning as a separate venture with Principal of UK, Punjab National Bank and Vijaya Bank each holding 25 per cent in the entity.

But there has been a change in holding pattern which was reflected in the rechristened company's holding pattern.

According to members of the insurance regulator, the change in shareholding pattern was effected without any prior intimation to the Authority.

This had resulted in a situation wherein the Authority was unable to assess the capability of the new shareholders to fulfill the conditions of holding a license as specified under IRDA (Insurance Brokers) Regulations, 2002 which it found detrimental to the interests of the policyholders.