ICICI Lombard gets CCI approval
Competition Commission of India (CCI) approved acquisition of the non-life insurance business of Bharti AXA General Insurance Company by ICICI Lombard General Insurance Company.
Although, the regulatory approval will smoothen takeover and the resultant merger between two private sector insurers leading to a share dilution, which will be an earnings dilutive, but the scale & synergy will help ICICI Lombard to optimise expense ratio in future.
Earlier in August, ICICI Lombard announced its merger with Bharti AXA’s non-life insurance business. The combined entity is set to emerge as the third-largest non-life insurer in India. Post the proposed deal, ICICI Bank’s shareholding will come down to 48.1% while Bharti & AXA will together hold 7.3% stake in the merged entity.
The exchange ratio for the same stands at 2 shares of ICICI Lombard for every 115 shares held by the shareholders of Bharti AXA General Insurance business. ICICI Lombard believes that there is significant headroom available for operating leverage and cost-effectiveness and that they do not require any capital raise at the moment given the solvency margins remain well above the regulatory requirements.
Also, Bharti AXA has a stronger presence in motor insurance and hence, the combined entity will be able to garner 12% market share in this segment.
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