On Saturday, the board of ICICI Lombard General Insurance Company said in a statement that it has approved a proposal to merge the company with Bharti AXA’s non-life insurance through a scheme of arrangement. This deal is said make it the third largest non-life insurer in India.
The merger would make the ICICI Lombard capture nearly 8.7% of the market share in the industry. The combined annual premium of the two companies would be of ₹16,447 crore. The official details of financial statements were not released, however as per sources the deal values Bharti AXA General at around ₹ 2,700 crore.
The shareholders of Bharti AXA will receive two shares of ICICI Lombard for every 115 shares of Bharti AXA held by them, based on the share exchange ratio recommended by independent valuers as on the date on which the scheme is approved by the board.
As of today, Bharti Enterprises and French Multinational Insurer AXA hold a joint venture with 51% and 49% stake respectively. After the necessary approvals, the non-life insurance business will be demerged from Bharti AXA into ICICI Lombard. There are no special rights being granted to Bharti or AXA, post the merger. Both Bharti and AXA will be categorised as public shareholders.
They will receive a total of 3.58 crore shares in ICICI Lombard, which would amount to € 521 million, Reuters reported.
As per first quarter of FY-21, Bharti AXA General’s solvency stood at 1.77 as against the minimum regulatory requirement of 1.5. The combined ratio stands at 115 percent.
Ernst & Young has acted as an M&A advisor to ICICI Lombard and AZB & Partners acted as its legal advisors. Cyril Amarchand Mangaldas and Talwar Thakore & Associates acted as legal advisors to Bharti and AXA respectively.
ICICI Lombard in a statement quotes, “Through this proposed transaction, ICICI Lombard shall be able to augment its distribution strength with Bharti AXA’s existing distribution partnerships. The combined entity shall also benefit from continued partnerships with Bharti Enterprises.”
Rakesh Bharti Mittal, Chairman of Bharti AXA General Insurance said, “Over the past few years, our business demonstrated consistent growth, forged productive partnerships and increased the distribution footprint significantly. We are confident that the proposed amalgamation of our business with ICICI Lombard will bring greater business synergies and create value for all stakeholders.”
Bhargav Dasgupta, MD & CEO of ICICI Lombard General Insurance, said, “This is a landmark step in the journey of ICICI Lombard and we are confident that this transaction would be value accretive for our shareholders. We are excited by the capabilities and strengths that Bharti AXA will add to our franchise. The company has a talented employee base with a strong cultural fit, and we look forward to welcoming them to the ICICI Lombard family.”