HDFC Ergo completes L&T GI merger, eyes 20% premium growth

A man reads a newspaper at a bus stop outside the Larsen and Toubro (L&T) Head Office in Mumbai, India May 25, 2016. Reuters/Shailesh Andrade - RTSFU0C

HDFC Ergo General Insurance, which today completed the merger of L&T General Insurance, is hopeful of closing the current fiscal year with a premium at around Rs 7,500 crore, or around 20 percent growth.

The third largest private non-life insurer, on a standalone basis, had closed fiscal 2017 with a total premium of Rs 6,289 crore.

The company today completed the merger with L&T General Insurance, marking the first amalgamation in the country's non-life insurance sector.

The market share of the merged entity is 4.9 percent.

Before the merger, HDFC Ergo was the fourth largest in terms of market share.

In June 2016, the company had announced the buyout of the L&T arm for around Rs 551 crore, this was around 1.1 times the gross premium of L&T General Insurance.

The merger completion happened after the National Company Law Tribunal (NCLT) and sectoral regulator Irdai approved the deal.

"The industry is likely to grow by 18 per cent, whereas we are expecting a growth of 20 per cent in the current fiscal," Mukesh Kumar, executive director of HDFC Ergo General Insurance, told PTI today.

In the June quarter, the company's net profit almost doubled to Rs 76 crore from Rs 38 crore in the year-ago period. As end June, its total premium stood at Rs 1,738 crore.

Its underwriting losses almost halved to Rs 20 crore from Rs 38.7 crore a year ago as the combined ratio improved to 99.2 per cent. The company had a claim ratio of 76.4 percent.

In the previous financial year, HDFC Ergo registered a growth of 72.8 percent and also witnessed an expansion in the market share, from 3.5 percent to 4.6 percent.

In the current financial year, HDFC Ergo plans to further scale up its business and expand its reach into small towns.