HDFC Ergo General Insurance, the insurance arm of mortgage lender HDFC, has acquired L&T General Insurance for Rs 551 crore, the first such consolidation in India’s crowded general insurance sector, which currently has 29 players.
L&T General Insurance had reported gross earned premium (GEP) of Rs 483 crore for the last financial year, which puts the deal value at 1.14 times of the GEP. “Considering the importance of scale in the insurance business, consolidation within the insurance industry is inevitable,” said Deepak Parekh, chairman of HDFC and HDFC Ergo General Insurance. “The combined size and expertise will result in improved cost efficiencies in the merged entity and benefit policyholders and other stakeholders,” he said. HDFC Ergo expects significant cost synergies arising out of business, technology optimisation and rationalisation of offices.