Munich-headquartered Allianz SE, one of the largest insurers in the world, could be exiting from the over two-decade-long joint ventures with the Bajaj group’s life and general insurance companies, in which it holds 26 per cent stake each.
The move comes at a time when many foreign insurers have picked up higher stakes in their joint ventures with Indian players after foreign direct investment in the insurance sector was increased gradually to 74 per cent.
According to an Emkay report released last month, Allianz’s stake in both the insurance companies is pegged at Rs 30,000 crore.
“Allianz has indicated to Bajaj that given its strategic priorities, it is actively considering an exit from the life and general insurance joint ventures. It has indicated that it remains committed to the Indian insurance market, but will not speculate on alternatives,” Bajaj Finserv, the holding company of both the insurance companies, said in a filing to the stock exchanges.
Although Allianz has indicated its intention to exit the joint ventures, there is no proposal before the board of the company or the insurance subsidiaries in this regard as discussions are still at a “preliminary” stage, Bajaj Finserv, which has 74 per cent stake in both the companies since inception in 2001, said.
Given favourable regulatory reforms and India’s growth potential, Allianz seems to be taking a long-term strategic view, sources said.
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“Allianz, in case it exits the joint venture, has committed full support to Bajaj in ensuring a smooth transition to the Bajaj brand, keeping in mind the interest of policyholders, business partners, employees and other stakeholders of the insurance companies,” Bajaj Finserv said.
Sources said in case of Allianz’s exit from the insurance joint ventures, there will not likely be any major impact on the respective companies since Bajaj group has been running the companies since inception, including strategies, operations, and others.
Currently, there are three board members – Renate Wagner, Ritu Arora, and Sanjay Kishan Kaul – from Allianz on both Bajaj Allianz Life and Bajaj Allianz General Insurance. Allianz have around 40 per cent representation in both the insurers’ boards.
There are many foreign partners which has increased its stake in the Indian JV. Ageas Insurance International has hiked its stake to 74 per cent in Ageas Federal Insurance, following IDBI Bank’s exit from the insurance venture. Similarly, in Aviva Life Insurance, the foreign insurer stake has gone up to 74 per cent. In Future Generali Life, Italian insurer Generali has upped its stake to over 72 per cent.
Recently, Swiss insurer Zurich Insurance acquired a 70 per cent stake in Kotak Mahindra General Insurance for $670 million from Kotak Mahindra Bank.
As of September 2024, Bajaj Allianz Life has a 3.03 per cent market share in new business premiums, placing it at the fifth position in the pecking order, after Life Insurance Corporation (LIC) of India, SBI Life Insurance, HDFC Life Insurance, and ICICI Prudential Life Insurance. Similarly, Bajaj Allianz General Insurance is the second largest private sector general insurer, with a market share of 7.69 per cent as of September, and potentially the third largest general insurer overall.
Bajaj Allianz Life Insurance reported a profit after tax (PAT) of Rs 97 crore in Q1FY25, and a premium income of Rs 4,058 crore, while Bajaj Allianz General Insurance reported a PAT of Rs 576 crore, and a premium income of Rs 4,761 crore during the same period.