IDBI Bank on Saturday announced its plan to divest 27% of its stake in IDBI Federal Life Insurance Company to its existing partners. IDBI Bank will sell 23% to Ageas Insurance and 4% to Federal Bank at a combined value of about ₹595 crore.
The Company has been formed by a three-way joint venture between IDBI Bank, Federal Bank and Ageas Insurance. As on March 2020, IDBI Bank holds 48% in the IDBI Federal Life Insurance while Federal Bank and Ageas Insurance has 26% each respectively in the insurance company.
After this stake sale, IDBI Bank’s holding in the insurer will come down to 21%, while Ageas Insurance share would go up to 49%. Even Federal Bank’s share would go up to 30% post the stake sale in the IDBI Federal Life Insurance. The Board of Director of the IDBI Bank had taken the decision at the meeting on Friday.
On April 8 this year, Board of Directors of IDBI Bank had approved in principle the proposal to sell IDBI Bank’s stake in IDBI Federal Life Insurance to the extent of 23-27%. The data from Insurance Regulatory and Development Authority of India (Irdai) shows that IDBI Federal Life Insurance has seen first year premium at ₹24.37 crore in this fiscal up to May as compared to ₹55.13 crore in last year a fall of 55.80%.
Currently Life Insurance Corporation of India (LIC) holds 51% stake in IDBI Bank and has its own insurance business. According to the insurance regulations an entity holding more than 10% is considered as a promoter while one holding below 10% is considered as an investor.
As on March 31, 2019, the IDBI Federal Life Insurance has issued over 13 lakh policies and has total assets under management of ₹9,107 crore and a capital base of over 800 crores, as on March 31, 2019.
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