Prism Cement, a Rajan Raheja Group company, will sell its entire 51 percent stake in Raheja QBE General Insurance to Paytm's Vijay Shekhar Sharma backed -technology company QORQL for Rs 289.68 crore.
Raheja QBE is a joint venture general insurance company promoted by Prism Cement India and QBE Holdings (AAP) Pty, a wholly-owned subsidiary of QBE Insurance Group Australia. This deal values the company at Rs 568 crore.
While the shareholding structure in QORQL is not publicly available, Rajan Raheja group company Prism Johnson in a stock exchange filing said Vijay Shekhar Sharma has the majority shareholding in QORQL and the remaining is held by Paytm, which is owned by One97 Communications.
Set up in 2015, QORQL is a healthcare startup that uses artificial intelligence and big data. It offers two solutions, Qcare a service for doctors to access patient health, and Qhealth for patients to engage with clinics and self-manage their health. Paytm had invested in this venture in April 2017.
With respect to the deal with Rajan Raheja Group, this sale is subject to receipt of the approval of shareholders and all other entities.
In FY20, Raheja QBE had gross written premium of Rs 158.12 crore, showing a year-on-year growth of 36.3 percent.
For the year ended March 31, Raheja QBE had a net loss of Rs 62.1 crore compared to Rs 20.3 crore in the year-ago period.
The combined ratio stood at 133.9 percent showing that the insurer was making underwriting losses. This meant that the claims paid were higher than premiums collected.
In an earlier interview to Moneycontrol, Raheja QBE had said that the company is eyeing a higher share of the retail segment in the non-life industry.
Why is the general insurance industry attractive?
The gross written premiums of the general insurance industry stood at Rs 1.89 lakh crore in FY20. Due to the non-life insurance penetration as a percentage of India's gross domestic product being less than 1 percent, there is a rising opportunity to improve insurance coverage.
This is true especially of segments like motor insurance and health insurance. Health insurance has gained significance after the Coronavirus (COVID-19) due to the costs of hospitalisation involved with the treatment.
Paytm has been selling insurance as a distributor. Once this deal goes through, the payments company will be able to become the promoter of an insurance company.
In a blog post on March 3, Paytm had said that it has a license to sell insurance as an insurance broker. Prior to this, it was selling insurance as a corporate agent which meant that it could only sell products of three life, three non-life and three standalone health insurers each.
The corporate agent license had allowed Paytm to roll out insurance products across four categories including two-wheeler, four-wheeler, health, and life. The entity had said in March 2020 that it has already tied up with 20 insurance firms in India and will be integrating with 30 more companies over the next few weeks.