There has been a rise in the number of private equity firms that have expressed interest in acquiring stakes in local insurers following the government’s move to allow PE firms to become insurance company promoters, according to the Insurance Regulatory and Development Authority of India (IRDAI).
By giving getting permits to become insurance promoters, PE firms can hold a significant stake in insurance companies and exit in five years.
Reportedly, global PE major Warburg Pincus is acquiring a 26% stake in IndiaFirst Life Insurance from Legal & General Group for Rs7.1 billion ($106 million).
The Indian market is viewed as having much growth potential as insurance has a low penetration rate.
Insurance penetration saw a rise to 3.49% from 3.40% in fiscal 2017, according to the Sigma report by Swiss Re.
Life penetration stood at 2.72% while general penetration stood at 0.77%.
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