The listing of ICICI Lombard General Insurance and the reduction of their foreign partner FairFax Holdings' stake in the entity was a surprise announcement for the industry. However, in an annual letter to the shareholders, Fairfax Financial Holdings’ Chairman Prem Watsa said that they had to reduce their ownership due to regulatory norms.
The insurance company was a joint venture between ICICI Bank and Fairfax. It is the largest private sector general insurer.
Watsa explained in his letter that given, property and casualty insurance being the company’s core business, its optimism in the Indian growth story and the fructifying partnership ICICI Lombard, Fairfax increased its shareholding to 35 percent. This move was made immediately after the government allowing 49 percent of foreign ownership in the sector in 2015.
However, he added that ICICI Lombard intended to open a new chapter in their journey, by going public. With this move, the promoter, ICICI Bank wanted to control at least 55 per cent ownership and the Indian Law requiring public participation to be at least 25 percent of a listed entity, Fairfax had to reduce its ownership to a mere 20 percent.