Housing Development Finance Corporation (HDFC), the country largest mortgage lender, has divested a 26 per cent stake in its general insurance arm to ERGO International, an affiliate company of German insurance giant Munich Re. HDFC had bought this stake from is previous partner the US-based Chub Corp, in May after falling out over business strategy.
Sources said HDFC had bought Chubb’s stake at around Rs 12 a share and sold it to ERGO at a substantial premium. While refusing to disclose the deal size, HDFC Chairman Deepak Parekh said a big premium was attached. The new firm will be named HDFC ERGO General Insurance Ltd.
Speaking on the occasion, Munich Re Chairman Nikolaus Von Bomhard said, “We believe that HDFC and ERGO are a perfect fit and both will benefit from the growth of the Indian insurance market.” Munich Re is also in discussions for a joint venture in the life insurance segment. “We are talking to potential partners and expect to conclude a deal shortly, he added.