HDFC finds Australian insurance partner
Insurance Australia Group (IAG) is set to buy 26 per cent in HDFC Chubb General Insurance, a wholly owned subsidiary of Housing Development Finance Corporation (HDFC), reports Arun Kumar.india Updated: Jul 13, 2007 21:40 IST
Insurance Australia Group (IAG) is set to buy 26 per cent in HDFC Chubb General Insurance, a wholly owned subsidiary of Housing Development Finance Corporation (HDFC). According to highly placed sources, the Australian insurance major has outbid the German Ergo, an arm of Munich Re, and Travelers of the US for the stake.
Industry sources said on condition of anonymity that IAG would invest between Rs 150 crore and Rs 200 crore in HDFC Chubb, resulting in an enterprise valuation of Rs 600-800 crore. The deal has been closed and an announcement is due on or before HDFC’s board meeting on July 25.
In May, HDFC bought out its partner Chubb Global Financial Services Corporation of the US from its general insurance venture. HDFC was not happy with Chubb’s risk appetite and bought Chubb’s stake almost at face value, sources said. After the acquisition, the general insurance business became a 100 per cent subsidiary of HDFC.
It is not known whether HDFC will divest its holding or issue fresh equity to IAG. Under the agreement, HDFC is not expected to disclose financial details for a certain period. It will also continue to use the Chubb name for two months from the parting date.
Sources said a senior management team from IAG headed by Frank Costigan, head of strategy, was in Mumbai to close the deal. However, HDFC’s spokesman refused to comment on the issue.
IAG is a leading general insurer in Australia with operations in Australia, New Zealand, the UK and Asia. IAG underwrites approximately $7.5 billion of premiums a year and employs around 16,000 people. The group insures more than $900 billion worth of property. The group's net assets were $4.5 billion on December 31, 2006. Last year, IAG acquired leading motor insurance broker Hastings Business and Europe’s Equity Insurance Group.