Star India may Need to Buy a ‘Boycott’ Cover Before ICC World Cup

BROADCASTER COULD INCUR A LOSS OF ₹100-120 CRORE in ad revenues if India decides to boycott its league match with Pakistan on June 16

Star India, the media rights holder of the upcoming ICC World Cup, will have to pay the biggest price if the Indian government and the Board of Control for Cricket in India (BCCI) agree to boycott the match with their arch-rivals Pakistan. Star India can, however, protect itself from the possible losses due to the boycott by buying other insurance policies.

It is for the first time that in the cricket-crazy nation fans want a boycott of the Pakistan match in the wake of the killings of 40 CRPF jawans in Pulwama, Kashmir. But in a scenario where India decides to forfeit its league match with Pakistan on June 16, Star India will incur a loss of at least ₹100-120 crore in terms of ad revenues.

While Star India may not have to pay the licence fee for one particular match, losses incurred due to boycott will have to be borne by Star India as the insurance policy, as of now, does not cover cancellation of a match due to withdrawals. The broadcaster has taken close to ₹1,500 crore insurance for the World Cup from New India Assurance, United and SBI General Insurance.

“New India Assurance is the lead insurer for Star India,” said a source close to the development. “The policy is for ₹1,457 crore covering advertisement loss due to cancellation of a match.”

The policy covers all matches played at the World Cup. However, the broadcaster will have to buy a separate policy for terrorism risk. A senior New India Assurance executive confirmed the development. United India is the co-insurer along with SBI General Insurance Company.

At the last World Cup in 2015, the estimated ad revenue from the India-Pakistan match on February 15 was ₹100-110 crore from 93 brands that used the platform to advertise, and that match clocked a historic 288 million viewers.

The noise over boycotting Pakistan in the World Cup has risen since the terrorist attack in Pulwama. Last week, in a letter to the ICC and the England Cricket Board, Rahul Johri, CEO, BCCI, urged the cricketing community to sever ties with countries from where terrorism emanates.

The policy is designed in a way that will cover cancellation due to weather conditions and teams not attending due to catastrophes, but so far, the risk of boycott is not woven into the policy. Experts said with three months to go, Star India could buy a terrorism policy to cover the risk of boycotts.

The Indian cricket board first took a policy for the Indian team in 1993. It first started taking policies for World Cup in 1996.

Over the last few years BCCI is buying a large cover for Indian Premier League, insuring the players against injuries, loss of fees for players due to injuries among others.

The key players are insured for as high as ₹10-12 crore.


Source:- The Economic Times- Mumbai

Date:-27th February,2019

True North Buys 51% in Max Bupa

Private equity firm True North Tuesday bought a 51% stake in standalone health insurance company Max Bupa in an all-cash deal, valuing the company at ₹ 1,001 crore.

The board of Max India Tuesday approved the sale that will lead to a cash inflow of ₹511 crore for the seller. Bupa, the existing joint venture partner with 49% holing, retains its stake.

At the conclusion of the transaction, True North will nominate its directors to Max Bupa’s Board, while Max India’s nominated directors will step down. The use of the Max brand will be phased out over a period of two years and replaced with a suitable name. The Bupa brand name will continue as before.

“We are rebalancing our portfolio of businesses with a much sharper focus on growing shareholder value, and this transaction is a step toward that journey,” said Analjit Singh, founder & chairman, Max Group.

True North has investments in more than 40 Indian businesses over the last 19 years through its six investment funds, with a combined corpus of more than $2.8 billion.

“Higher growth, highest persistency —policy holders renewing their health insurance policies –and prospects of a good quality retail franchise were the triggers to purchase this business,” said Divya Sehgal, Partner, True North.

Source:- The Economic Times

Date:- 27th February,2019-Wednesday

Digital HR In Workplace

Not only are job seekers but even recruiters increasingly using mobile apps to filter the right candidates for jobs in a hassle-free manner

Digital transformation is a much-extolled disruptor in almost all organizations. Organizations are reshaping themselves because of digital transformation. As organizations transform themselves, their departments have undergone tremendous change primarily because of digitalization.  The HR division is no exception. Digital and social media have also positively changed the HR division in the workplace. They have transformed how organizations recruit, train, pay and retain employees. For instance, managers use LinkedIn to identify active and passive job seekers.  This digital recruiting trend has seen a tremendous rise in recent years.  Companies are using many other social media sites other than LinkedIn, like Facebook and Twitter to hire the right talent. The company connected globally use video-based interviews instead of face to face interviews. Video-based interviews offer many benefits in the hiring process by increasing connectivity and saving time.

Given all the technological advancements and digital disruptions taking place in the world, we can even question ourselves whether “Is it the end for Traditional workplace era?”  Automation is ruling the HR world as well. Automated HR processes benefit the HR department to handle the humungous volume of data with ease, few errors, and faster implementation enabling time-saving. Some of the HR functions which have seen successful automation are Leave requests approval, Employee information system updates, training and onboarding process, Payroll and appraisal process etc.,

Digital HR has been identified as the top trend by Deloitte 2017 Global Human Capital Trends report. Organizations are concentrating on developing digital workplaces which is nothing but to redefine how people work and connect with their colleagues. As per Deloitte 2017 report, 56 percent of businesses are redesigning their HR programmes to leverage digital and mobile tools, 33 percent of HR teams use Artificial Intelligence (AI) tools to deliver HR solutions and 41 percent are actively building mobile apps to deliver HR services.

One of the major HR game changers is the dominance of millennials at the workplace. This generation is tech-savvy, highly collaborative and adaptable. To embrace innovation and change, organizations must focus on recruiting more millennials as they can suit the demand of being digitalized. Apart from this, the existing workforce must be trained to learn new technologies to adapt to the digitalized workplace.

Work from home and Homing from work are increasingly acceptable practices nowadays. This encourages remote working and flexible schedules and ensures work life balance. The emphasis here is on caring employees, as organizations believe that employees who are well taken care of will, in turn, take care of the customers. Companies also use self-service systems to help employees book and manage their leave on their own. Workflow management tools like Asana, help organizations to keep track of projects as well as their human resources.

In fact, the digital space is increasingly expanding outwards into the cloud. On a whole, SMAC (Social, Mobile, Analytics, and Cloud) is making a tremendous impact on the workplace. Shifting from traditional to Digital HR demands companies to invest in cloud-based software solutions and tools to automate the end to end talent management processes starting from recruitment to retention of employees.  Many companies are also incorporating AI into their HR processes to reduce time-consuming administrative tasks. AI seems to be showing great promise in helping HR teams focus more on delivering their digital HR strategies.

HR is not only about people, but also about processes. Right from recruitment, performance metrics to structured training and compensation, cloud-based HR solutions help in the centralization of employee data. The existence of cloud in HR is still in infancy stage. Almost all HR software nowadays offer cloud-based solutions. All information can be stored and retrieved from online, as well as information can be archived in a secure location. The most commonly used cloud-based HR solutions software are Oracle, SAP, ADP, Infor, Workday, etc.

Another important trend in HR is the use of mobile-enabled HR solutions. Increased usage of mobile apps with today’s generation or millennial employees have highly contributed to self- service. Today’s generation is more comfortable and dependent on mobile apps for all daily activities including hunting for jobs. This is because mobile devices make their work convenient and cost-effective. Not only are job seekers, even recruiters increasingly using mobile apps to filter the right candidates for jobs in a hassle-free manner.  This is again the reason for many companies to introduce mobile-based apps and games to train their employees.

As HR teams grapple and take into stride the pace and impact of the digital world; as we wonder, “When, Why and How HR became Digital? It eases the challenge by going back to the basics. Use can be made of Dave Ulrich’s (pioneer in strategic HR) model that throws light on the four roles played by HR in any organization.

Strategic Partner: Traditional HR playing the role of strategic partner concentrates on fostering ‘systems thinking’ and ‘customer focus’ by aligning strategies with business. As the world is becoming digitalized, the strategic partner plays a key role in aligning business strategies to digital demands. This will help employees to stay connected anytime, anywhere.

Change Agent: A Change agent is the one who understands the organization’s culture and helps assist line managers to lead and cope with organizational change. One way of transforming culture to employees is through the induction process. This can be done by e-based training sessions or video based training. Training for upgradation of skills need not necessarily be based on chalk and talk or face to face workshops as there are digital alternatives even available on the internet.

Administrative expert: HR in this role will aim to deliver HR processes in an efficient and effective way. Using AI and Machine learning techniques, HR can provide feasible solutions to increase employees’ potential as well as provide retention strategies using analytics.

Employee champion: Employee champions enhance people contribution by motivating them and enhancing the commitment of employees. One such aspect is to encourage employee engagement. Research indicates that digital networking tools and platforms have led to increased employee engagement.

Digital transformation will decide the future of human resource function. Dave Ulrich model is one of the paradigms used to explain the transformation. Organizations can adopt different paradigms to digitalize their workforce and workplace.

Salient Features of Digital HR in the workplace:

1.    Agility to integrate people, technology and processes

2.    Learn to adopt from other departments like Marketing or Operations

3.    Embrace Design thinking

4.    Ensure real-time employee experience

5.    Integrate analytics and reporting

HR in many companies, to large extent, concentrates spending money on digitization. What HR has to do is to make an immediate shift towards digitalization. HR is progressing to lead the workplace’s digital transformation via cloud services, new technologies, and platforms. The change is more or less inevitable as otherwise, it compromises on efficiency. HR teams can continue to adapt digitalize and modernize in comfort even by being firmly grounded in the basic tenets of the HR function. Digital transformation is happening at a quicker pace. HR function must be involved in preparing for the automation to tackle not only the redundancies but also on reskilling of employees.

What an irony; Human invents technologies to assist them but have to reskill themselves to work with the technologies!

Source: Business World

Date: 16th January 2019

Merger of Three General Insurers Likely in FY20

National Insurance, United India Insurance and Oriental India told to make operations more efficient

The proposed merger of the three state-owned general insurance firms will happen only in the next fiscal, said two government officials aware of the developments.

We will further bring down the losses before setting up a combined entity,” said one of the officials.

The government had announced merger of National Insurance Company, United India Insurance Company and Oriental India Insurance Company in the Budget 2018.

The government has now directed these firms to make their operations more efficient and low cost, while the companies are also looking at monetising their assets including real estate to raise revenues, the official said.

The other official said the government is also looking at issues such as the need for a review of the HR practices across the three firms. “Right now there are no synergies,” the official said. “Any merger will further impact the commercial interest of these insurers.”

The government had plans to list the merged entity. In 2017-18, it had listed National Insurance and General Insurance Company, divesting 11.65% and 12.5% stakes, respectively, in the two companies.

An executive at Oriental India Insurance said that the government is also expected to infuse some capital to help these companies.

In quarter ended September last year, the three insurers had posted a combined loss of around ₹1,800 crore.

“The market share of all the public sector general insurance companies has also come down,” the Oriental Insurance executive said.

Oriental had posted a loss of ₹240 crore in the second quarter of this fiscal, against a profit of ₹200 crore in the quarter ended September 2017. As per latest data from Insurance Regulatory and Development Authority of India (IRDAI), market share of National Insurance Company for gross direct premium till December 2018 fell by 9.52% to 8.63%. United India Insurance share also came down by around 4.88%. Last year, the government had initiated a six-point reform agenda for general insurers which included sustainable and prudent business, talent management and customer orientation.

Financial services secretary Rajiv Kumar in a tweet said, “Aim is to develop comprehensive reform agenda in six themes to modernise public sector GICs. Committed to work towards safety net of all citizens.”

Source: Economic Times

Date: 19th February 2019

Free insurance comes with strings attached

There is nothing called free lunch in this world, but time and again financial product companies have tried to use the lure of zero-cost to attract customers. Banks today offer free life insurance for fixed deposits. Mutual funds promise free life cover for systematic investment plans (SIPs). Credit cards come with complimentary travel insurance. Even, Unit Linked Investment Plans (ULIPs) are offering insurance virtually free of cost if you stay invested for the long term. This may prompt investors and customers to ask that if insurance comes for free then what is the need to buy it separately? It is a natural question. Free insurance comes with some strings attached. Read on to know more.
SIP insurance
Three fund-houses, namely, Reliance MF, Aditya Birla Sun Life MF and ICICI Prudential MF, offer free life insurance when you do Systematic Investment Plan (SIP) of mutual funds in designated schemes with them. The life cover is free for the investor as the fund house bears the premium cost. The validity of the bundled life insurance cover depends on the age brackets. The free life cover is for individual investors whose entry age is 18 years and more and less than 51 years at the time of investment. The cover is extended up to 55 to 60 years depending on the company. The maximum life cover in this free life insurance policy is Rs 50 lakh per investor across all schemes/plans and folios. The insurance cover is only applicable if you do a SIP for a minimum of three years. There is no upper limit for SIP tenure. The investor can opt for perpetual SIP also. However, the insurance cover ceases when the investor attains the maximum age or upon the completion of the SIP tenure whichever is earlier. The insurance cover would cease to exist if there is redemption/switch-out (fully or partly) of units purchased under the scheme before the completion of the SIP tenure, or investor defaults on SIP installments for a fixed number of times.Very early death claims, that is, within a few days from the commencement of the SIP installments, are not covered, unless death is due to some accident.
“These are quite restrictive policies, if you look carefully. Plus, to get Rs 50 lakh insurance cover, you will need to invest quite a significant amount of money. The life cover is 100-120 times the monthly SIP installment. So, to get Rs 50 lakh cover you will need to invest between Rs 40,000-50,000 a month,” says Tarun Singh, a financial consultant.
Cover with card, bank FDs
Some high-end credit cards offer free travel insurance. However, do note that such travel insurance is valid for international travel only in most cases. Credit cards charge high rate interest of interest (2-3.5% per month), so they can bear small costs as long as you use such cards. Plus, high-end cards have big annual fees that help them cover travel insurance premium costs.Banks also offer one-year complimentary life cover if you open FDs. For example, ICICI Bank offers a product called FD Life whereby you open a fixed deposit and you get a group term plan life cover. It offers customers, who are 18-50 years of age, the dual benefit of investment growth via FD and security through a free term life insurance of one year for the FD holder. The free term life insurance policy is from ICICI Prudential Life Insurance. The term life cover is of Rs 3 lakh on opening an FD of at least Rs 3 lakh for a tenure of minimum two years. In case of partial/premature withdrawal of deposit, the free life cover offered to customers will be withdrawn from the date of partial/premature withdrawal. The customer gets a complimentary insurance cover for one year. The customer has the option to renew it next year.
Vaidyanathan Ramani, Head, Product and Innovation, says: “While investments and credit cards now offer insurance coverage, it is always advisable to have standalone insurance plans as they can be customised to cover your needs. Comprehensive insurance policies not only offer more holistic coverage but also offer more clarity about the kinds of risks covered. They are usually thrifty and there are many options available in the market. On the other hand, On the bundled insurances, there may be ambiguity surrounding the coverage and benefits. Such plans may also restrict flexibility owing to its linkage to the underlying item.”
Return of insurance cost with Ulips
Some new-age Ulips, from the likes of Canara HSBC Oriental Bank Of Commerce Life and Bajaj Life Insurance, are today giving you virtually free life insurance cover. Some other insurers firms are mulling offering free life insurance with Ulips. You may ask that Ulips are sold by life insurance companies and you have to pay a premium, so how are they free? The answer is simple: Ulips are a combination of insurance and investment. When a policyholder purchases a life insurance policy, he/she pays a premium to the insurance company to get a life cover. A part of the premium that funds the mortality charges deducted by the insurer, which is for providing life cover under the policy. Mortality charge depends on factors such as age, amount of coverage (sum assured) of the policyholder, gender, policy term, smoking habits, health factors, etc. This is deducted on a monthly basis by cancellation of units and is an added cost from an investment perspective. For instance, a 30-year old healthy male buying a Ulip with a sum assured of Rs 1 crore for a 20-year term may be paying over Rs 30,000 as mortality cost over the entire term. In some plans life cover charges or the mortality charges are returned after the life assured attains 60 years of age, or after 15 years.”Such features help you add back to your retirement corpus, at maturity” says Dheeraj Sehgal, chief institutional business officer, Bajaj Allianz Life Insurance.
While the return of mortality costs makes such policies less expensive, the lock-in in a Ulip or of mortality charges after a set period or maturity means that if you exit an underperforming policy, you will lose out on the benefit. So, the catch is that the cost of life insurance is returned only if you stick around for a long-term.
Dated: 18th February 2019

Artificial intelligence, genuine results: Technology in recruitment

Technology has fast become a buzzword for HR, posing challenges yet creating opportunities. Priya Sunil speaks to recruitment leaders across a range of organisations to uncover real-time cases of how AI, machine learning and other tech platforms are disrupting talent acquisition.
Just over a decade ago, recruiters spent hours on end flipping through stacks of resumes, paid hundreds of dollars to post a print ad in the local newspaper, and even had to squeeze in multiple interview sessions with tens of candidates to find suitable hires.
Fast-forward to today, and (almost) gone are the stacks of papers – recruiters are virtually flipping through resumes online instead. They no longer have to fight for ad space in the papers because they are posting job openings online and reaching a wider mass.
Employers are also tapping on artificial intelligence, online job portals and social media to facilitate a shorter and smarter recruitment process.
In this feature, we speak to recruitment leaders across Singapore and Malaysia – DBS, PwC Malaysia, Tele-centre Services, Credit Suisse, and Global HR Consultant Cordero Davis – on how they have harnessed technology in talent acquisition, the bumps and learning along the way, and their outlook for 2019.
How companies are leveraging technology: The game changer
In June 2018, Asian-born financial services group DBS became a Southeast Asian pioneer by introducing a virtual bank recruiter called Jobs Intelligence Maestro, JIM for short.
The brainchild of Singapore start-up Impress.AI and DBS’ talent acquisition team, JIM, powered by AI, was built with a view to increase the efficiency of hiring wealth planning managers.
According to James Loo, Head of Talent Acquisition Group, Group Human Resources at DBS Bank, pre-screening processes such as reviewing resumes, collecting applicants’ responses and conducting psychometric assessments are now automated thanks to JIM.
Aside from JIM, DBS also leverages data analytics to hire high performers and reduce attrition rates, a concept agreed upon by Global HR Consultant Cordero Davis. For Davis, it is important to track accurate data and leverage analytics to create the best internal and external recruitment experiences.
“AI allows me to successfully influence positive recruitment changes with data and create effective interviewer training to successfully hire the best talent for each role,” he says.
Across the straits, professional services provider PwC Malaysia has developed online applications for candidates that allow its recruiters, based in Kuala Lumpur, to recruit remotely. In fact, for a new team of trainee associates, there was only one trip required, when its recruiters were physically present on-site to conduct the interview session. The consulting firm backs this up by harnessing the power of social media (Facebook ads, Twitter, LinkedIn), online collaborative tools, online forms and e-newsletters.
Similarly, Aldrina Thirunagaran, Vice President, Human Resources, Virtual Recruitment Lead APAC at financial services firm Credit Suisse, champions new channels, technology platforms and partnerships as integral components of the firm’s virtual recruitment strategy to expand its reach to interns and graduates globally.
Meanwhile, a fuss-free and straightforward process is employed by Madhavan Charles, Talent Acquisition Manager at customer service provider Tele-centre Services, wherein the firm posts ads on several job portals such as Jobs Bank and JobStreet, as well as on social platforms such as Facebook and LinkedIn.
The benefits: Increased efficiency
There is no doubt technology can take the weight off the shoulders of recruiters. For example, a 2018 CareerBuilder survey revealed 37% of employers who used social networks to source candidates found useful information that supported their qualifications for the job, thus leading to better hires.
Among our interviewees, PwC Malaysia has been able to reap multiple benefits from virtual recruiting – primarily, recruiters being able to work and access the information they need from anywhere and at anytime. This not only gives them flexibility in a job that traditionally had them bound to a desk all day and shifting through hard-copy applications, but also allows them to integrate work and life seamlessly, especially for those raising families.
“One of our recruiters even had a flexible work arrangement where she came for half a day, four times a week. Despite her reduced office hours, she was still able to fulfil her responsibilities,” says Nor Sherriza, Lead, Employer Branding & Talent Acquisition at PwC Malaysia.
Additionally, going virtual helps the firm track the high volume of applications, while maintaining the digital history/ footprint for each applicant. “Even if the recruiter has changed over time, the database remains and the current recruiter is able to view the applicant’s history and make an informed decision,” she says.
Over at DBS, JIM’s ability to automate aspects of the process has saved the team around 40 man-hours a month, enabling recruiters to spend more time focusing on talent advisory and upskilling themselves. Loo adds: “At the same time, candidates benefit from having access to a virtual recruiter 24/7 and a faster and more streamlined process.”
While talking numbers, Davis says with the help of automation and chatbots such as Mya, technology has benefited companies by increasing hiring productivity by 75%. “This allows recruiters to focus the rest of their time on building impactful candidate relationships, align with hiring managers, and attractive employer branding,” he says.
And on Credit Suisse’s side, Thirunagaran says: “Using content and digital marketing to further strengthen our employer brand and value proposition ensures we are able to find the right candidates for the opportunities available.”
Charles adds, in terms of being able to find the right candidates through technology: “Though our hiring policy is strictly to consider Singaporeans as our first priority, but with Skype, the company is opened up to opportunities to interview foreign talent in the case the local pool lacks certain skill sets required for the role.”
Overcoming the challenges: A friend or foe?
As efficient as technology has been in recruiting, it has brought along its own set of challenges – the first of which is the missing link to a human element, a point agreed upon by three of our interviewees.
For example, when DBS first tested JIM with a small group of candidates, the bot’s persona was deemed “too static and cold”. However, as Loo aptly puts it: “Challenges can be viewed as opportunities, and with each roadblock, we viewed this as a chance to improve our product.”
Following the test feedback, his team was able to quickly change the persona to one that was more professional and warm. He adds: “Our biggest learning with JIM is to always get feedback and to iterate quickly.” Sherriza and Davis also mention the point around the human touch. From Sherriza’s point of view, this is “often seen as cold, mechanical, and to some point, heartless.”
To overcome this, her team makes it a point to call shortlisted applicants for a chat. She adds: “This helps us make a sincere human connection while giving us the opportunity to understand each individual and brief them about the role and recruitment process.”
On Davis’ end, he says: “When sending a test or a challenge to technical candidates, there is no way a recruiter can tell if the candidate actually took the test themselves. In some cases, recruiters may have to spend extra time to have a more thorough pre-screening to recommend the best talent to hiring managers.”
In line with this, a 2019 trends prediction by Korn Ferry revealed that despite AI’s beneficial qualities, care must be taken that using AI doesn’t undermine efforts to boost diversity.
For example, even when resumes are anonymised, AI can still embed gender biases. To address this, recruiters should feed the AI with non-partial data that highlights success factors. This way, AI can be trained to look for skills needed rather than subjective modifiers that may be biased. Finally, while the usage of online job portals has allowed companies to post ads for vacant job roles and make the application process straightforward, it has also resulted in a number of applicants taking it for granted.
Sherriza explains: “We end up having less-than-genuine applicants who are merely ‘trying their luck’ and ‘seeing where it goes’. Such applicants tend to not show up for their interview or contribute to the high-decline rate as many eventually realise they weren’t truly interested.”
How do we tackle this? Provide applicants with an online assessment. “Applicants who aren’t genuinely interested think twice about going through the effort of answering a test and will tend to drop out thus saving our recruiters time and effort,” she adds.
From these interviews, it is clear technology has played a huge role in evolving recruitment – and it will continue doing so. It is, however, important recruiters remain mindful of maintaining a balance between the technological aspect with a human touch. “Although technology helps us achieve rapid hiring goals, the human-like recruitment experience cannot be fully replaced by technology and that’s the fear we tackle while growing companies at scale,” Davis concludes.
Wishlist: Making the most of technology in 2019
Madhavan Charles, Tele-centre Services: “I am looking forward to the development of our company website to have applicants apply on our website as well as the addition of a chatbot. We have had some trials and things are looking positive.”
Nor Sherriza, PwC Malaysia: “We wish to capitalise on AI to run assessments that use gamification, for example, which makes it less daunting for the candidates as they don’t feel like they are being ‘tested’ and equally less daunting for the recruiters as the results can be assessed immediately.”
James Loo, DBS Bank: “We will continue to leverage AI and machine learning to improve our recruitment processes. JIM will also be available in our other core markets – Hong Kong, China, Taiwan, Indonesia and India – for wealth planning manager roles.”
Aldrina Thirunagaran, Credit Suisse: “I believe this goes beyond the technology and ultimately boils down to partnerships, within the industry and beyond. Collaboration is a big part of Credit Suisse’s DNA and it is also key to creating unique business propositions while driving value.”
Cordero Davis, Global HR Consultant: “In 2019, I plan to take full advantage of utilising recruitment technology while combining the human side of recruiting to create impactful and unique candidate experiences to attract a more diverse talent pool.”
Dated: 18th February 2019

Big Investors Approached for SBI General Insurance Deal

Swiss Re, Zurich Insurance, Gen Re, Blackstone, Apax, Advent, CPPIB, KKR, ADIA, Temasek, PremjiInvest among potential suitors

Some of the world’s largest strategic investors such as Swiss Re, Zurich Insurance, Liberty General and bulge-bracket private equity firms such as Apax, Advent, Blackstone Group, Warburg Pincus and KKR have been approached to buy a 26% stake in SBI General Insurance for around ₹3,400 crore, said people with knowledge of the matter.

Canada Pension Plan Investment Board (CPPIB), sovereign wealth funds such as Abu Dhabi Investment Authority (ADIA) and Temasek as well as existing investors like PremjiInvest have also been approached to buy out Insurance Australia Group (IAG), which is looking to exit its nineyear-old Indian joint venture as part of a larger global realignment.

The biggest Australian general insurer is restructuring its Asia-Pacific operations and has already exited Indonesia, Thailand and Vietnam, said the people cited above. India and Malaysia are next on the agenda. Earlier this month, the Australian company said its first-half profit dropped 9.3%, hurt by claims from the hailstorm that battered Sydney in December. Net profit fell to $500 million in the six months ended December 31, compared with $551 million in the same period a year earlier.

State Bank of India (SBI) had sold a 4% stake in the company to Axis Asset Management Co Ltd and PremjiInvest for ₹482 crore at a ₹12,000-crore valuation in September last year. This was seen as a price discovery exercise ahead of an initial public offer (IPO) that was planned by the end of FY20. SBI’s stake in the venture dropped to 70% following the sale, while IAG continued to own 26%. In December 2016, IAG had expressed its interest in raising the stake to 49% in the next two years. IAG paid ₹542 crore for a 26% stake in the joint venture, which started in 2010.

Non-binding bid submissions started in the first week of this month. IAG has mandated Goldman Sachs to run an official sale process. It’s still not clear if IAG will sell in one shot or in phases but executives said a strategic investor would want the entire 26%.

“Close to 40 potential suitors have been sounded out, including Warren Buffett’s General Reinsurance Corp (Gen Re),” said one of the persons cited above.

Source:- The Economic Times-Mumbai

Date:- 13th Feb,2018- Wednesday