Multinational insurance service provider XL Group is all set to buy about 20% of the stake in Mahindra Insurance Brokers Ltd. (MIBL). With this acquisition, XL Group will support MIBL in increasing insurance penetration in rural and semi-urban India. XL Group will buy the 20% stake for Rs.260 crore which values MIBL at Rs.1,300 crore.
One of MIBL’s investors LeapFrog Financial Inclusion Fund will play an active role in this investment deal. LeapFrog already holds about 15% stake in Mahindra Insurance. It will buy another 5% stake in the company and sell the total 20% stake to XL Group. These details were provided in a statement released by Mahindra Insurance.
By partnering with Mahindra, XL Group aims to increase awareness about insurance in various regions in rural India. Insurance penetration is extremely low in rural India. MIBL’s already existing infrastructure in rural India will help XL Group improve its operations in an emerging market like India. On the other hand, XL Group’s expertise in the global markets will help Mahindra improve its insurance service in India.
According to Greg Hendrick, president of P&C insurance and reinsurance at XL Catlin, this minority investment will help XL Group understand the insurance landscape in an emerging market like India. MIBL’s managing director Jaideep Devare said that this deal will help the company adapt and introduce insurance ideas from the global markets in India.
Mahindra Insurance, which was established in 2004, is the insurance wing of Mahindra & Mahindra Financial Services Ltd. The company provides both life and general insurance services. It primarily caters to the rural and semi-urban markets of the country. The cost-effective insurance solutions offered by the company ensures that people from underprivileged sections of the country have access to insurance. According to the company, it has served over 8 million cases across various parts of rural India.