HDFC ERGO General Insurance Company is set to acquire to L&T General Insurance Company, said a press release issued by the company.
In its board meeting held today, the board of directors of HDFC ERGO decided to purchase 100% stake in L&T General Insurance. However, the deal is subject to regulatory approvals.
In the press release, Deepak Parekh, Chairman of HDFC Ltd and HDFC ERGO General Insurance said, "Considering the importance of scale in the insurance business, consolidation within the insurance industry is inevitable. This transaction marks the beginning of this consolidation phase. The acquisition will help HDFC ERGO to further strengthen its presence in the market. The combined size and expertise will result in improved cost efficiencies in the merged entity and benefit policy holders and other stakeholders."
The transaction has been valued at Rs. 551 crore. This acquisition would help HDFC ERGO improve its market position.
HDFC ERGO, a 51:49 joint venture between housing major HDFC Ltd and ERGO International, Germany (part of Munich Re Group), is the fourth largest private sector general insurer in India and offers all lines of general insurance products. During the financial year ended March 31, 2016, the Company wrote gross premiums of Rs 3,467 crore and made a profit after tax of Rs. 151 crore.
Launched six years back, L&T General Insurance is a relatively new entrant in the insurance industry. During the financial year ended March 31, 2016, L&T General Insurance wrote gross premium of Rs 483 crore registering a growth of 40% over previous financial year.