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Kotak Mahindra Bank has entered into an agreement to purchase the entire 26 percent equity stake held by UK-based Old Mutual Kotak Mahindra Old Mutual Life Insurance. The size of the deal is Rs 1292.7 crore.
Gaurang Shah, President – Asset Management, Insurance & International Business at Kotak Mahindra Bank, said that Old Mutual is going through a process of managed separation and they are breaking the enterprise into four verticals.
"As part of the restructuring exercise, they came and offered to us whether we will be ready to buy out their stake," he said.
After the completion of the transaction, Kotak Mahindra Group will hold 100 percent of the equity shareholding of Kotak Life. Shah said that they expect the regulatory approvals to be received in the next 3-4 months.
The net worth of Kotak Life stands at Rs 1825 crore as on March 31, 2017. "The benefit for Kotak Mahindra Bank is that the deal that gives us 100 percent ownership is value accretive to the group," said Shah.
Compared to the Rs 185 crore that the foreign partner had put in, they have seen a growth of 15.3 percent on a compounded annual growth rate.
Kotak Life posted a net profit of Rs 303 crore in FY17 compared to Rs 251 crore in FY16, while the new business premium was Rs 2850 crore.
Their claim settlement ratio stood at 99.5 percent. Pure risk products accounted for 25 percent of the total portfolio. Traditional products accounted for 75 percent while 25 percent came from unit-linked insurance plans (Ulips).
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