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ICICI Lombard and Bharti AXA sign definitive agreements to combine their non-life insurance businesses

  • Rs. 164.47 Bn annual premium on a combined basis with market share of ~ 8.7%[1]
  • Proposed transaction to propel combined entity to #3 ranking among non-life insurers
  • Strategic partnership between ICICI Lombard – one of the largest private sector non-life insurers in India, Bharti - one of India’s leading business groups with diversified interests and AXA - a large well-reputed global insurer
  • Opportunity for combined entity to leverage Bharti AXA’s growing distribution platform through existing partnerships and augmentation of agency force
  • Value creation for all stakeholders with operating leverage and synergies

New Delhi, August 21, 2020: The Board of Directors of ICICI Lombard General Insurance Company Ltd. (“ICICI Lombard”) and Bharti AXA General Insurance Company Ltd. (“Bharti AXA”) at their respective meetings held today, approved entering into definitive agreements for demerger of Bharti AXA’s non-life insurance business into ICICI Lombard through a Scheme of Arrangement.

Based on the share exchange ratio recommended by independent valuers and accepted by the respective boards of ICICI Lombard and Bharti AXA, the shareholders of Bharti AXA shall receive 2 shares of ICICI Lombard for every 115 shares of Bharti AXA held by them as on the date on which the Scheme of Arrangement is approved by the Board of Directors of ICICI Lombard and Bharti AXA.

The proposed transaction provides a meaningful opportunity for ICICI Lombard to consolidate its market leading position in the non-life insurance sector, becoming the third largest non-life insurer. The combined entity shall have a market share of ~ 8.7% on pro-forma basis. Through this proposed transaction, ICICI Lombard shall be able to augment its distribution strength with Bharti AXA’s existing distribution partnerships. The combined entity shall also benefit from continued partnerships with Bharti Enterprises, one of India’s leading business groups with diversified interests, and AXA, a large well-reputed global insurer.

The proposed transaction is expected to result in value creation for all stakeholders through meaningful revenue and operational synergies. Policyholders are also expected to gain from an enhanced product suite and deeper customer connect touch points. Employees of the combined business will also benefit via greater opportunities across functions and geographies.

The closing of the proposed transaction is subject to various conditions precedent, including regulatory approvals from the Insurance Regulatory and Development Authority of India, Competition Commission of India, The Securities and Exchange Board of India, Stock Exchanges, Reserve Bank of India, NCLT and approval of shareholders of both ICICI Lombard and Bharti AXA, amongst others. Upon obtaining all approvals, when the scheme becomes effective, the non-life insurance business will be demerged from Bharti AXA into ICICI Lombard.

Commenting on the announcement, Mr. Bhargav Dasgupta, MD & CEO of ICICI Lombard General Insurance said, “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 are excited by the capabilities and strengths that Bharti AXA will add to our franchise. The company has a talented employee base with a strong cultural fit, and we look forward to welcoming them to the ICICI Lombard family. We would also like to reassure Bharti AXA’s policyholders and channel partners of seamless business continuity and maintaining highest standards of customer service.”

Mr. Rakesh Bharti Mittal, Chairman of Bharti AXA General Insurance said, “We are delighted that the partnership between Bharti and AXA has been successful in laying down a solid foundation in the domestic insurance landscape. 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.”

Transaction Advisors:
Ernst & Young LLP (EY) acted as the exclusive M&A advisor to ICICI Lombard.

AZB & Partners acted as the legal advisor to ICICI Lombard. Cyril Amarchand Mangaldas acted as legal advisor to Bharti and Talwar Thakore & Associates acted as legal advisor to AXA.

BDO Valuation Advisory LLP and MKSA & Associates recommended the share exchange ratio for the demerger of Bharti AXA into ICICI Lombard. Ernst & Young Merchant Banking Services LLP provided fairness opinion to the Board of ICICI Lombard.