Overseas acquisition will not drag growth: Shriram Capital

MUMBAI: After becoming the first private general insurer to pick up a majority stake in an overseas insurance firm, Shriram General Insurance is hopeful that the acquisition will supplement the growth of the consolidated entity than being a drag on a capital intensive industry.

"We don't think, the acquisition will be a drag on the consolidated entity as we consider Philippines as a growth market. Also, the capital invested is not very high," Group Director, Shriram Group, G S Sundararajan told PTI today.

Shriram General Insurance raised its stake in Philippines- based general insurer Monarch Insurance to a majority 61 per cent after the insurance regulator allowed domestic general insurance firms to do business overseas in May this year.

Shriram Group had earlier held around 40 per cent stake in Monarch through its investment subsidiary, Bharat Inc in 2007, and increased it to 61 per cent with a capital outlay of Rs 35 crore.

As per the company, this acquisition will be reflected in the balance sheet of the company in the current financial year.

Meanwhile, Sundararajan also pointed that the domestic general insurance firm is expecting higher reach of insurance products in both these geographies.

On the growth expectations in the domestic market, he said the company expects 25-30 per cent growth in premium vis-a-vis last fiscal for the year ending March 2014.

"In the current fiscal, we hope to grow reasonably well. We are predominantly operating in the motor segment and is the only player that is profitable in this segment in the country," Sundararajan said.

Shriram General Insurance is the wholly-owned subsidiary of financial services conglomerate, Shriram Capital.