XL Group to buy 20% stake in Mahindra Finance's insurance arm

Mumbai: Mahindra Insurance Brokers Ltd on Monday said that XL Group will acquire a 20% stake in the insurance broker that primarily serves rural and semi-urban India.

Mahindra Insurance Brokers is a unit of Mahindra & Mahindra Financial Services Ltd (Mahindra Finance). The proposed transaction values Mahindra Insurance Brokers at Rs1,300 crore.

“The existing shareholder in Mahindra Insurance Brokers, LeapFrog Financial Inclusion Fund, through its subsidiary Inclusion Resources Private Ltd (IRPL), currently holds a 15% equity stake in Mahindra Insurance Brokers. It will purchase an additional 5% stake in Mahindra Insurance Brokers from Mahindra Finance (taking its total equity stake in Mahindra Insurance Brokers to 20%), and immediately sell the entire capital of IRPL to XL Group, subject to necessary regulatory approvals,” the company said in a statement.

XL Group, a global insurance and reinsurance company, will help support Mahindra Insurance Brokers’s endeavours to increase insurance awareness and penetration in under-served markets and customers in rural India.

“This minority investment plays to our commitment to emerging markets and to supporting insurance penetration in developing economies, helping improve economic resilience by closing the gap between economic and insured losses. It will also provide us a chance to better understand the primary retail insurance and distribution landscapes in the rapidly developing Indian market,” said Greg Hendrick, president, P&C Insurance and Reinsurance, XL Catlin.

XL Group has a large shared service operation presence in India, at Gurugram and Bengaluru, operating under the brand XL Catlin.

The company provides business and underwriting support, claims administration, actuarial services, finance and accounting.

Since inception in 2004, Mahindra Insurance Brokers has serviced over 8 million insurance cases, according to the statement.

“Mahindra Insurance Brokers has been adding value to customers across rural India through its innovative solutions and superior services. We want to introduce insurance ideas from global markets, suitably adapted for the Indian market. Mahindra Insurance Brokers will continue to focus on rural and semi-urban areas, where insurance penetration is low,” said managing director Jaideep Devare. Mahindra Insurance Brokers’s parent Mahindra Finance has a strong presence in rural and semi-urban areas, with a branch network of over 1,100 locations.

Shares of Mahindra Finance rose 2.85% to Rs431.45 on BSE, while the benchmark Sensex gained 0.62% to 32,633.64 points.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.