Street finds discomfort in ICICI Lombard-Bharti Axa merger deal

Bharti Axa's weak underwriting and high combined ratio are earnings dilutive, while valuations are on the higher side

Even though the BSE Sensex was up about one per cent on Monday, the stock of ICICI Lombard General Insurance Company (ICICI Lombard) shed 1.4 per cent. following thde announcement of merger of Bharti Axa General Insurance Company’s (Bharti Axa’s) general insurance business into ICICI Lombard. While the deal, announced on Friday post market hours, improves ICICI Lombard’s market share to 8.7 per cent from seven per cent currently, making it the third largest general insurer, analysts believe the valuation given to Bharti Axa's general insurance business is not justifiable given the latter’s operating performance.

“Bharti Axa, is a sub-optimal