Allianz to Exit Insurance JVs With Bajaj

Mumbai: Munich-based Allianz SE is in talks to exit from the life and general insurance joint ventures with Bajaj Group, the latter’s subsidiary Bajaj Finserv Ltd said in a filing on Tuesday. The discussions are at a preliminary stage and there is no proposal before the Board of the company or its insurance subsidiaries in this regard, said Bajaj Finserv.

“Allianz has indicated to Bajaj that given its strategic priorities, it is actively considering an exit from the life and general insurance joint ventures. It has indicated that it remains committed to the Indian insurance market but will not speculate on alternatives,” said Bajaj Finserv.

Bajaj Finserv holds a 74 per cent stake each in two JVs Bajaj Allianz Life Insurance Co. and Bajaj Allianz General Insurance Co. while Allianz owns the remaining.

Allianz plans to exit because Bajaj Group isn’t allowing the German insurer to raise its stakes at a discounted price. It also isn’t given a say in strategic decisions, according to a Bloomberg report.

As per a 2001 joint venture agreement, the German company had a call option to increase its stake in the life insurance joint venture to 74 per cent from 26 per cent at a predetermined price if allowed under laws and subject to regulatory approvals. If the option is exercised by July 30, 2016, the pre-determined price will be Rs 5.42 per share, plus interest at 16 per cent per annum from July 31, 2001, to the date of payment. After 2016, Allianz would have to pay the market price.

Allianz is instead now looking to buy stakes in newly established insurance firms to retain a presence in the fast-growing South Asian country, said the news report.

Allianz, in case it exits the joint venture, has committed full support to Bajaj in ensuring a smooth transition to the Bajaj brand keeping in mind the interest of policyholders, business partners, employees and other stakeholders of the insurance companies, the statement further said.

The Bajaj Allianz general insurer is the third-largest in the country by gross written premiums, while the Bajaj Allianz life insurer is one of the fastest-growing with assets under management of Rs one lakh crore as of March 31, 2024.