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ICICI Lombard Bharti AXA deal makes the former third-largest non-life insurer

ICICI Lombard Bharti AXA deal makes the former the third-largest non-life insurer in India. Bharti AXA will cease operations in its insurance business once the merger successfully concludes.

ICICI Lombard Bharti AXA deal is expected to increase its business through the bancassurance and corporate agency tie-ups that Bharti AXA has developed. Both these General Insurance companies have come together for a merger, which will make ICICI Lombard the third-largest non-life insurer in India if concluded successfully.

This merger was initiated when a scheme of arrangement between the two companies gained approval. As per the agreement, the ICICI Lombard Bharti AXA deal will spawn India’s third-largest insurance body within a year. 

This is a landmark step in the journey of ICICI Lombard, and we are confident that this transaction would be value accretive for our shareholders. We would also like to reassure Bharti AXA’s policyholders and channel partners of seamless business continuity and maintaining the highest standards of customer service.– said Bhargav Dasgupta, CEO, ICICI Lombard  

This acquisition is being valued at Rupees 4600 crores and is said to be a pure-stock transaction. Once the stake is claimed successfully, Bharti AXA will cease operations on its non-life insurance business. When the agreement was reached between the board members of the respective organizations, it was decided that the shareholders of Bharti AXA would each receive two ICICI Lombard shares in exchange for 115 Bharti AXA shares that they were holding on the day of approval of the agreement.  

The transaction is expected to help ICICI Lombard tie-up with the leading banks which will be further leveraged to introduce health products, OPD products, fixed benefit products, and other small-ticket products in the market. For Bharti AXA, the move is to shift from the motor insurance, small & medium-sized enterprises to cross-sell other products.

The emerging company is predicted to be in possession of approximately 8.7% market share on Pro-forma grounds. ICICI Lombard is confident of positive outcomes from the merger. It stated that the resulting entity would host a broader product suite and provide a more significant number of access points and comprehensive services to customers. 

Over the past few years, our business demonstrated consistent growth, forged productive partnerships and increased the distribution footprint significantly. We are confident that the proposed amalgamation of our business with ICICI Lombard will bring greater business synergies and create value for all stakeholders, – said Rakesh Bharti Mittal, Chairman of Bharti AXA General Insurance. 

This is an ideal business opportunity for Bharti AXA since it has been trying to step away from its financial services business for quite a while. Bharti AXA pursued a similar agreement in 2016 when it had approached Reliance Industries, offering up a 74% stake in the life insurance business. However, this did not fructify at the time.  

The merger will conclude successfully after it has received relevant approvals from the Insurance Regulatory and Development Authority of India (IRDAI), the Competition Commission of India, stock exchanges, the Securities and Exchange Board of India (SEBI) as well as from different shareholders and stakeholders. 

ICICI Lombard Bharti AXA deal will be beneficial for customers since ICICI Lombard will emerge as a much more robust and financially stronger insurer to fulfill customers needs.  

Anju Nambiar
Anju Nambiar
Anju has an insatiable thirst for learning, reading, and experiencing the unknown. She is a freelance writer and loves all things that make life beautiful and worth living. She is also fiercely creative, compassionate, and hopes to move the world with her writing.
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