Insurance Regulatory and Development Authority (IRDA) has 'in principle' approved the transfer of 26 per cent stake (32,500,000 equity shares of Rs.10/- each) in HDFC General Insurance Company Limited (HGICL) held by HDFC Limited in favour of ERGO International AG, part of the Munich Re Group.
HDFC Ltd. will receive INR 235 Crores from ERGO International AG for the 26% share in the HDFC General Insurance Company Ltd. The transaction is likely to be completed during this month.
Mr. Deepak Parekh, Chairman HDFC Ltd. said, "General Insurance has been one area where we have lagged behind. There are huge opportunities as the Indian Economy is growing over 9%. We need to gear up and focus our energies to become one of the prominent players of this fast growing industry. ERGO is a leading player in Europe, and I am certain that their vast experience, technical expertise & operational know-how will make a big difference for this business."
The Shareholder's agreement between the two companies was signed on October 30, 2007 between Mr. Deepak Parekh, Chairman of the Board of HDFC Ltd. and Dr. Nikolaus von Bomhard, CEO of ERGO's parent company - the Munich Re Group. HDFC General Insurance Company Ltd company will be renamed as HDFC ERGO General Insurance Company Ltd. and will be headquartered in Mumbai.
The new partnership will enable HDFC Ltd. to successfully grow its existing general insurance operations by further leveraging their outstanding brand equity and distribution strengths. For ERGO, entering the joint venture with HDFC Ltd. underlines the Group's international expansion strategy and offers a direct entry into the Indian general insurance market.
ERGO is the primary insurance entity of Munich Re Group, one of the world's leading risk carriers. ERGO is one of the largest insurance groups in Europe and Germany and is Europe's market leader in health and legal protection insurance. 33 million clients in 25 countries place their trust in the services, competence and security it provides. In the business year 2006, ERGO Insurance Group had gross premiums written of EUR 16.8bn and a consolidated result of EUR 906m.
Incorporated in 1977, HDFC the pioneer of housing finance in India has assisted more than 3 million families to own a home of their own, through housing loans approvals of over Rs.1,750 billion. It has consistently striven for and developed an excellent reputation for professionalism, integrity and an impeccable record of customer friendly services.
HDFC has been described as a model housing finance company for developing countries with nascent housing finance markets. It has provided technical assistance in Bangladesh, Sri Lanka and Egypt and has undertaken consultancy assignments in various countries across Asia, Africa and East Europe.
It has been recognized among India's Best Managed Companies and today has emerged as a financial conglomerate by promoting a bank, insurance company (for life and general), an asset management company, a realty company, a credit bureau and a real estate venture capital company. The HDFC group has an asset base of over Rs 2,100 billion and a customer base of over 17 million.