Switzerland's Zurich Insurance Group, reportedly in talks to acquire up to 51% stake in Kotak General Insurance Co., has valued the Indian insurer at more than three times the multiple commanded by its largest private peer.
Zurich Insurance expressed interest in acquiring either a minority stake of 49%, or a majority 51% stake in Kotak General, Reuters reported citing unnamed people.
Kotak General declined to comment over the phone and didn't respond to emailed queries.
According to the Reuters report, the Uday Kotak-backed company is being valued at around $800 million (about Rs 6,500 crore). The deal is expected to be worth $400 million, or around Rs 3,300 crore.
Kotak General's book value stood at Rs 341 crore as on March 31. Meaning that Zurich Insurance is prepared to offer 19 times the book value, going by the report.
By comparison, while initiating coverage on ICICI Lombard General Insurance Co. in July 2022, Motilal Oswal had assigned India's largest and only listed private general insurer a price-to-book multiple of 6.1 times for FY23.
That's more than threefold premium for Kotak General over its larger peer. The insurer had a market share of 0.49% as on May 31 compared to ICICI Lombard's 10.21%.
In FY23, the general insurance arm of Kotak Mahindra Bank reported a net loss of Rs 117 crore, while earning a gross premium income of Rs 808 crore, according to company disclosures.
Kotak General Insurance FY23 Highlights
After-tax loss widened to Rs 117 crore.
This is despite a 41% rise in net premium earned of Rs 682 crore.
The combined ratio, calculated by adding incurred losses and expenses and dividing them by the premium earned, was at 121% as against 122%.
The claim ratio improved to 69% versus 77%, while the expenses of management ratio rose to 52% from 45%.
Solvency ratio stood at 1.83 versus 1.79.
Segment-wise, the company incurred a loss on its marine business, health retail, motor and miscellaneous categories. It earned an operating profit in its fire and health group business.
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