HDFC shortlists 3 players for insurance JV

Housing Development Finance Corporation (HDFC) has shortlisted three foreign insurers for inducting one of them as a joint venture partner in its wholly-owned subsidiary, HDFC Chubb General Insurance Company. Of the three insurers, two are from the US and one from Australia, said a senior HDFC official.

The shortlisted companies include US-based Travelers and Australia's IAG Group. HDFC has decided not to have Germany's Ergo Group as a partner, though Ergo is still in talks with it.

The official said HDFC is likely to take a final decision within 15 days. Last month, at HDFC's annual general meeting, Chairman Deepak Parekh had said that HDFC has shortlisted two to three players with whom talks are on for a possible tie-up. He added that HDFC will be charging a premium from the foreign partner.

"We have a readymade company, products, personal and commercial lines of businesses and HDFC's brand and distribution network are available. Therefore, international companies are willing to pay a premium."

According to the head of a leading insurance consulting firm, HDFC can also command a premium of another Rs 150 crore in lieu of a call option where the foreign partner would be allowed to increase its equity stake to 49 per cent from the present 26 per cent when the foreign direct investment (FDI) limit in the country is hiked.

In the month of May, HDFC entered into an agreement with Chubb Global Financial Services Corporation, USA (Chubb Global) to acquire its 26 per cent stake in HDFC Chubb General Insurance Company (HCGICL) for Rs 32.5 crore, following which HCGICL became a 100 per cent subsidiary of HDFC. The agreement allows HDFC to continue with the company's name for two months from the date of buyout.