Non-banking finance company Sundaram Finance Ltd today said it plans to purchase 26 per cent equity stake in Royal Sundaram Alliance Insurance Company, owned by UK-based RSA Group, for Rs 450 crore.
Royal Sundaram Alliance Insurance Company, a Joint Venture between Sundaram Finance Ltd and RSA Group, United Kingdom, was granted licence in 2000 in India to operate in the non-life insurance space.
The company offers motor, health, personal accident, home and travel insurance for individuals and fire, marine, engineering and liability policies for commercial clients.
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Currently Sundaram Finance Ltd and its associates have 74 per cent stake and RSA Group the remaining 26 per cent.
"Sundaram Finance Ltd and RSA Group have reached an agreement whereby RSA has agreed to sell its entire 26 per cent equity stake in Royal Sundaram Alliance Insurance Company to Sundaram Finance for a consideration of Rs 450 crore, subject to all regulatory approvals", a company statement said.
"After completion of the transaction, Sundaram Finance and its associates will hold 100 per cent of shareholding of Royal Sundaram Alliance Insurance Company Ltd", it said.
The stake of Sundaram Finance Ltd alone now at 49.9 per cent, will increase to 75.90 per cent post acquisition,it said.
Royal Sundaram Alliance Insurance Company reported Gross Written Premium of Rs 1,437 crore for the FY 2014.
"Sundaram Finance and RSA have enjoyed an excellent relationship over the past 15 years and built up a successful and respected brand in the insurance industry in India.", Sundaram Finance Ltd., Managing Director, T T Srinvasaraghavan said.
RSA has added a lot of value on the technical aspects of the business and been a valued business partner, he said.
"RSA Group had recently undertaken a review of their business globally and decided to exit non-core markets, of which India is one.", he said.
