Fairfax needs to sell 25% stake in ICICI Lombard to get a new permit
MUMBAI: The insurance regulator has asked the promoter of Oben General Insurance to comply with regulations before applying for the next stage of approvals for its second licence in the general insurance industry.
Canada-based Fairfax Financial Holdings, the promoter of Oben General Insurance, will have to sell 25% stake in ICICI Lombard, its joint venture with ICICI Bank, over the next two months to be able to apply for an R2 licence to operate another general insurance company.
“We have asked Fairfax to comply with regulations before they apply for R2 licence,“ said a senior official of the Insurance Regulatory and Development Authority (Irda). The second-stage approvals will be taken up for discussion at Irda's next board meeting, which is over two months away.
Earlier this month, the regulator gave its preliminary nod to Oben General Insurance. For an R2 licence, the regulator looks at the business model of the company, including shareholding compliance. In the final stage of the three-part approval system, the regulator looks at the formation of the company.
There are three large private equity companies in the final race to acquire 35% in ICICI Lom bard. According to the last deal, the joint venture was valued at Rs 17,225 crore. In in 2015, Fairfax had bought 9% stake in ICICI Lombard, raising its stake in the company to 35%.
While Fairfax is looking to sell 25% and retain 10% in the largest general insurance company , ICICI Bank is looking to sell 10% in the process to monetise some part of the sale. If not now, in case of a listing, Fairfax will have to sell stake in the JV . The Insurance Act requires an Indian promoter to own 51% in any joint venture.
Fairfax has applied for a second licence to form a new joint venture in general insurance with Kamesh Goyal, a former executive at German financial services major, Allianz. As per the application, different entities of Fairfax will own close to 45% in the joint venture. Goyal will have a 15% stake and Oben Ventures will hold the rest 40%.
The Insurance Act allows foreign promoters to hold up to 49% in local operations. Fairfax owns 35% in ICICI Lombard General Insurance. As an investor, one can own up to 10% in any insurance company . Going by this rule, Fairfax will have to sell 25% in ICICI Lombard, the largest private-sector general insurance company . During the April-February period, gross written premium of ICICI Lombard grew by 33% to `9,975 crore. It is the fourth-largest insurance company with 8.76% market share.
Canada-based Fairfax Financial Holdings, the promoter of Oben General Insurance, will have to sell 25% stake in ICICI Lombard, its joint venture with ICICI Bank, over the next two months to be able to apply for an R2 licence to operate another general insurance company.
“We have asked Fairfax to comply with regulations before they apply for R2 licence,“ said a senior official of the Insurance Regulatory and Development Authority (Irda). The second-stage approvals will be taken up for discussion at Irda's next board meeting, which is over two months away.
Earlier this month, the regulator gave its preliminary nod to Oben General Insurance. For an R2 licence, the regulator looks at the business model of the company, including shareholding compliance. In the final stage of the three-part approval system, the regulator looks at the formation of the company.
There are three large private equity companies in the final race to acquire 35% in ICICI Lom bard. According to the last deal, the joint venture was valued at Rs 17,225 crore. In in 2015, Fairfax had bought 9% stake in ICICI Lombard, raising its stake in the company to 35%.
While Fairfax is looking to sell 25% and retain 10% in the largest general insurance company , ICICI Bank is looking to sell 10% in the process to monetise some part of the sale. If not now, in case of a listing, Fairfax will have to sell stake in the JV . The Insurance Act requires an Indian promoter to own 51% in any joint venture.
Fairfax has applied for a second licence to form a new joint venture in general insurance with Kamesh Goyal, a former executive at German financial services major, Allianz. As per the application, different entities of Fairfax will own close to 45% in the joint venture. Goyal will have a 15% stake and Oben Ventures will hold the rest 40%.
The Insurance Act allows foreign promoters to hold up to 49% in local operations. Fairfax owns 35% in ICICI Lombard General Insurance. As an investor, one can own up to 10% in any insurance company . Going by this rule, Fairfax will have to sell 25% in ICICI Lombard, the largest private-sector general insurance company . During the April-February period, gross written premium of ICICI Lombard grew by 33% to `9,975 crore. It is the fourth-largest insurance company with 8.76% market share.
