HDFC, Chubb tap Irda to work out divorce
India’s largest mortgage firm HDFC and US-based insurer Chubb have approached insurance regulator Irda to help them work out a separation plan for their general insurance JV - HDFC-Chubb.
By TNN |
MUMBAI: India’s largest mortgage firm HDFC and US-based insurer Chubb have approached insurance regulator Irda to help them work out a separation plan for their general insurance JV — HDFC-Chubb.
Talks between the two partners have come to a naught with both the companies showing interest to take over the business. Though HDFC is a majority partner with a 74% stake, Chubb provides most of the products, processes and systems.
Unlike HDFC’s life insurance JV where its CEO, Shrirang Samant, is from HDFC, in HDFC Chubb the MD is from the US insurance company. As in a typical US company, the JV’s businesses have vertical reporting structure, with heads of many activities based outside the country.
Chubb, with assets of over $30 billion, is among the world’s largest insurance companies. Irda, while issuing a licence, gives strong weightage to the quality of promoters. Therefore, the company that opts out of the JV to set up a new venture will face tough norms.
Besides, it will have to draw up a new business plan. This means that even if Chubb finds out another partner, it will have to convince Irda about the company’s ability to bring in additional capital to meet stringent solvency norms. On the other hand, if HDFC buys out Chubb in the JV, it will no longer have access to Chubb’s expertise.
HDFC and Chubb are looking to part ways ever since differences cropped up on the growth strategy for the JV. HDFC was keen to pursue a more aggressive strategy against the game plan of Chubb, which wanted to wait for the market to evolve before big moves.
Following news reports that the JV was under review, HDFC-Chubb wrote to customers stating that Chubb was committed to the Indian market. It is also widely expected that Chubb would come in with new partners.
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