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.

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.

Read more in The Business Standard article.

Travelers may buy into HDFC Chubb

A high-level team from US insurer Travelers is in town to finalise a joint venture partner for non-life insurance. According to sources, the American insurer is in talks with HDFC to buy a 26% stake in HDFC Chubb General Insurance, following the buyout of Chubb’s stake by HDFC.

Travelers was spun off as an independent non-life insurer from Citigroup, which currently holds around 12% in HDFC. On Wednesday, HDFC chairman Deepak Parekh said that he expected to receive a premium for the 26% stake in HDFC Chubb General Insurance. “The partner will get the advantage of the HDFC brand, an existing business and infrastructure. So we do expect a premium for our stake,”

Mr Parekh added. HDFC has been allowed to use the HDFC Chubb name for two months. The corporation said that it expected to have a partner in place before the renaming. At present, Suresh Menon, general manager, Mumbai region, HDFC, has been appointed to the non-life insurance venture.