Chubb To Pick 26% In Hdfc Non-Life Arm

US-based Chubb Global Financial Services Corporation (Chubb) is picking up a 26 per cent stake in the proposed non-life insurance venture of Housing Development Finance Company (HDFC). The joint venture agreement will be signed tomorrow in Delhi and immediately thereafter, HDFC will move the Insurance Regulatory Development Authority (Irda).

To start with, the outfit -- christened HDFC Chubb General Insurance Ltd -- will have a paid-up capital of Rs 100 crore. HDFC Standard Life, the life insurance outfit, started with a paid-up capital of Rs 168 crore.

Sources said Chubb is picking up the stake at par. However, this could not be confirmed.

 

Incidentally, Standard Life had picked up a 18 per cent stake in the life insurance venture at par. However, it paid a hefty premium for picking up stake in HDFC's asset management company. It also has a stake in HDFC. Standard Life has a lower shareholding in the life company on account of its existing stake in the parent company, HDFC.

HDFC chief Deepak Parekh will head the non-life insurance venture as the non-executive chairman. The CEO's post is likely to go to a senior executive of the $25-billion global insurer, Chubb.

Chubb had earlier signed an memorandum of understanding with the Kotak Mahindra Group. This was dissolved as Kotak Mahindra chose to foray into the business of life insurance.

Though the Irda restricts the shareholding of foreign partners at 26 per cent in an insurance venture, Chubb and HDFC will have equal say in board matters.

HDFC today informed the Bombay Stock Exchange that, subject to the requisite licence from Irda, the board of directors today approved in principle to set up a joint venture non-life insurance company in partnership with the American-based insurer. Chubb is the sixth largest insurer in the United States.

Chubb chairman and chief executive officer Dean O'Hare sees immense potential in the Indian market, and compares it to markets like Shanghai where there are many hi-tech firms operating.

Chubb ranks among the top 10 publicly traded insurance companies in the US, and enjoys a credit rating of AA+ by Standard & Poor's. It has underwritten risks to the tune of Rs 25,500 crore during the nine month period ended September 2001. This is as opposed to underwriting insurance risks of Rs 30,000 crore in the calendar year 2000. The American insurer will announce its results for 2001 in early February.

The Chubb group intends to offer property and casualty insurance covers in the Indian market, as well as cover to Indian companies in sectors like software, biotechnology and internet. It will offer protection against losses incurred in e-communications and any claims arising out of vandalism and theft in internet transactions, including losses resulting from transfer, payment or delivery of funds on account of cyber crimes.