Zurich Insurance buys 70% in Kotak insurance arm for Rs 5,560 cr, rechristens Zurich Kotak General Insurance

New Delhi: Kotak Mahindra Bank has said Zurich Insurance Company has acquired a 70 per cent stake in its general insurance arm for Rs 5,560 crore.

"Pursuant to completion of relevant conditions precedent, including receipt of relevant regulatory approvals, Zurich has completed the acquisition of 70 per cent of the share capital of Kotak General," Kotak Mahindra Bank said in a filing on Tuesday.

With this, Zurich becomes the first foreign insurer to enter India since the FDI rules were amended to allow up to 74 per cent foreign ownership in 2021.

"With this, Kotak General has ceased to be a wholly-owned subsidiary of the bank on June 18, 2024 and the bank now holds the remaining 30 per cent of the share capital of Kotak General Insurance," it said.

As per the current regulatory guidelines, a foreign entity can own up to 74 per cent in an insurance venture in India.

Zurich Insurance, in a statement said, with the acquisition the company is rechristened as Zurich Kotak General Insurance.

In November last year, Zurich Insurance Company announced plans to acquire a 51 per cent stake in Kotak Mahindra General through a combination of capital infusion and share purchase, followed by a subsequent acquisition of an additional stake of 19 per cent within three years from the initial acquisition for Rs 5,560 crore.

Earlier this month, the Reserve Bank of India (RBI), and Competition Commission of India (CCI) had approved the acquisition of a 70 per cent stake by Zurich Insurance Company Ltd in the firm.

The acquirer is a wholly-owned subsidiary of Zurich Insurance Group Ltd (Zurich Insurance Group). It is a leading multi-line insurer serving people and businesses in more than 200 countries and territories.

Zurich has acquired a 70 per cent stake in Kotak General Insurance for a total consideration of Rs 5,560 crores (i.e., USD 670 million), through a combination of fresh growth capital and share purchase.

The transaction marks the largest foreign investment in India's general insurance market and is the first by a foreign insurer since the foreign direct investment (FDI) limit was raised from 49 per cent to 74 per cent in 2021, Zurich said in a statement.

With this entry, Zurich is fully committed to fostering the development and expansion of India's insurance sector in keeping with the Insurance Regulatory and Development Authority of India's (IRDAI) goal of achieving 'Insurance for All' by 2047, it said.

"The combined entity will bring to the Indian market, Zurich and Kotak's collective commitment to trust, innovation, integrity, and customer service. In due course, the business will adopt a new brand that represents both Zurich and Kotak as shareholders," it said.

India's general insurance market is poised for substantial growth, driven by greater consumer awareness of the benefits of insurance, continued development of digital and financial infrastructure, and a large and growing middle class, it said.

The strong growth in India's SME and corporate sectors will see demand for commercial insurance solutions, it said, adding, customers in these segments have distinct and complex needs that require a diverse range of commercial propositions to manage and minimize business continuity risks.