German insurance major HDI Gerling Industrie Verischerung will hike its stake to 49 per cent in Magma HDI General Insurance — a joint venture between Kolkata-based Magma Fincorp and the German insurer.
Currently, HDI Gerling has a 25.5 per cent stake in the venture, with Magma, Celica Developers and Jaguar Advisory together holding 74.5 per cent.
According to Swaraj Krishnan, Chief Executive Officer, Magma HDI, necessary applications will soon be made to the Foreign Investment Promotion Board (FIPB).
“By the end of this fiscal the stake hike will be through. HDI Gerling will take its stake up to 49 per cent,” he told
In the insurance space, the FIPB has so far cleared Tokio Marine Holdings’proposal to increase its stake (to 49 per cent) in Edelweiss Tokio Life Insurance Co (a JV between Edelweiss Financial Services and Tokio Marine Holdings), and that of Europe-based AXA Group in Bharti AXA Life Insurance Co and Bharti AXA General Insurance Co.
Post-stake hike, HDI Gerling is likely to bring in FDI of ₹190-200 crore. The exact amount, though, is yet to be ascertained.
“This is roughly the amount that’s been spoken of. But we will soon be hiring consultants for valuation purposes,” Krishnan added.
According to him, MHDI does not have any immediate requirement for capital infusion. The Kolkata-based general insurer reported a turnover of over ₹530 crore and a profit of nearly ₹6 crore last fiscal (FY15). It has a persistency ratio (that is, the same asset being re-insured with the insurer) of 36 per cent.
“This fiscal (FY16) the focus is not on growth, but rather on retaining the turnover at the same level as last year. We are also looking at a portfolio rejig,” he added. Tier III and IV towns remain the primary markets for MHDI.
The slowdown in the infrastructure sector is the main reason for MHDI looking at alternative avenues.
Re-jigging portfolioThe company will look to re-jig its portfolio by introducing new products targeting the health segment. Currently, 80 per cent of its turnover comes from motor insurance and the remaining from the property and liability segments.
“Health covers 25-30 per cent of the general insurance market, where we do not have any presence. As of now, motor accounts for much of our portfolio. So, obviously, the segment we would want to be in is health,” Krishnan added.
MHDI is already in the process of developing a prepaid health card that will facilitate payments at outpatient departments and day-care facilities of hospitals.
“We are currently in the process of resolving some issues of last mile connectivity. Hopefully, around November the health products should be there in the market,” Krishnan said.