Insurer ICICI Lombard in talks to buy Bharti AXA
ICICI Lombard General Insurance Co. Ltd, India’s largest private non-life insurer, is in advanced discussions to acquire Bharti AXA General Insurance Co. Ltd and merge the insurance assets of the two companies, said two people aware of the talks.
Both companies are negotiating the valuation of Bharti AXA, the people said, requesting anonymity.
ICICI Lombard, which has an 8.4% market share and is owned 51.89% by ICICI Bank Ltd, underwrote a gross premium of Rs 3,302.19 crore in the June quarter, 5.3% less than the same period last year. This was, however, in line with a weakness in the overall industry. Bharti AXA General, in comparison, recorded a 12% year-on-year drop in gross premium to Rs 508.93 crore during the quarter.
The acquisition plans come at a time when the general insurance industry is reeling due to the disruption caused by the Covid-19 pandemic and the economic slowdown.
The existing 25 general insurers (excluding standalone health insurers) saw a 6% drop in premium in the June quarter due to a steep slowdown in sales of non-life policies in the wake of a prolonged lockdown that led to a temporary halt in most commercial activities.
“The two companies are still in discussion and the plan is that ICICI Lombard will acquire the entire stake of both Bharti Enterprises and AXA. Bharti AXA has a much smaller business, but the two companies are willing for the merger. The pricing has not been finalised yet,” said the first person.
Bharti Enterprises currently owns 51% in Bharti AXA General, while its France-based JV partner AXA has 49%.
To be sure, Bharti Enterprises has been trying to exit its financial services business since long. In 2016, Bharti’s talks with Reliance Industries Ltd to sell its 74% stake at the time in Bharti AXA Life Insurance and Bharti AXA General Insurance were inconclusive.
“There are two more general insurance companies with whom ICICI Lombard is in talks with for similar acquisitions,” said the first person.
According to industry estimates, Bharti AXA has a market value of about ₹2,800 crore. ICICI Lombard is valued at ₹62,827 crore. Emails sent to ICICI Lombard and Bharti Axa General remained unanswered.