Wednesday, October 16, 2013

Shriram General becomes first insurer to make acquisition abroad

Private sector insurer Shriram General Insurance, the insurance arm of Shriram Group, has become the first private insurance company to buy company abroad. It has bought a substantial share in Philippine non-life company, Monarch Insurance.

The insurance regulator in India Insurance Regulatory and Development Authority of India, in May this year, permitted domestic insurers to do business abroad if they fulfil essential criteria set by the regulator. The guidelines required a life insurance company to have net worth of Rs. 500 crore, and a net worth of at least Rs. 250 crore for a general insurance company before making overseas investments. And, also they should have a three-year profit track record. 

This is the first overseas insurance transaction since the regulator’s nod. 

Earlier, the Shriram Group held a stake in the Philippine company through a Singapore-based holding company-Bharat Investment. 

Sri G S Sundararajan, Group Director of the Shriram Group said the group had planned to infuse Rs. 35 crore to meet capital requirements of which Rs. 10 crore was already invested. The remaining Rs. 25 crore has been invested by the group’s insurance arm after due approval from the regulator. 

Sriram Group had bought 40 per cent stake in Monarch in June 2007 for a consideration of about Rs. 7 crore. According to the website of the Monarch, it is a 50-year old Philippine SEC registered and Insurance Commission licenced general insurer. 

Promoted by Shriram Capital, Shriram General Insurance Company has a capital base of Rs 258 crore. It has registered a premium income of Rs 347 crore in the first quarter of this fiscal year. Shriram General has also been consistently making profits. 

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