German Ergo to buy 26% in HDFC insurance

Germany's Ergo Insurance Group, which is part of reinsurance major Munich Re, is buying 26 per cent stake in HDFC's general insurance venture for over Rs 200 crore.

Ergo Insurance beat Insurance Australia Group (IAG), which was also keen to acquire the stake in the Indian venture, after HDFC bought out Chubb's 26 per cent stake in HDFC Chubb General Insurance, said sources.

"Ergo is part of a much bigger group. Besides, it also has a wider product range compared with IAG," said sources.

HDFC officials were unavailable for comments.

Sources said the Rs 200 crore-plus amount to be paid by Ergo Insurance includes the premium. The deal is likely to be signed in coming days, they said.

For the life insurance business, Ergo is reportedly partnering with the Munjals of the Hero group.

It is a possibility that Ergo will buy 26 per cent through Ergo International AG, which is the holding company for the main foreign business entities of Ergo Insurance Group, the primary insurance arm of Munich Re, sources said.

Early in May, HDFC bought out Chubb Global Financial Services Corporation of the US in its general insurance venture.

HDFC ended its joint venture with Chubb Corporation following differences over style of running the business and risk appetite. The buyout price was not disclosed. The joint venture's capital is currently at Rs 125 crore.

HDFC Chairman Deepak Parekh had said earlier that he expected to receive a premium for the 26 per cent stake in HDFC Chubb.

He had also said HDFC had been allowed to use the HDFC Chubb name for two months. The corporation said it expected to have a partner before the renaming.