Edelweiss holds 51% in ETIL, of which 49% is held by Tokio Marine. Unlike many other insurance ventures in India, where the shareholders’ agreement gave the foreign partner the right to increase stake and whenever the regulations allowed, there was no such agreement between Edelweiss and the Japanese giant.
The Insurance Amendment Bill 2021, which was passed in June, has raised the foreign direct investment (FDI) limit in the insurance sector from 49% to 74%.
Sources said Edelweiss may have felt that the seeding control could derail its plans to list the insurance unit in the next few years.
When asked about the future of the relationship between the two partners, Jun Tokora, Chief Strategy Officer and Tokio Marine Person at ETIL Executive Committee, said, “The joint venture between Edelweiss Financial Services Limited (EFSL) and Tokio Marine Holdings (TMH) The agreement — — promoter of Edelweiss Tokio Life Insurance — has expired as of November 2021. We are engaged in discussions and will make any comments at an appropriate time.”
A few weeks ago some executives from Tokio Marine for ETLI have returned to the Japanese parent company in line with the original terms of the agreement between the two partners.
Edelweiss executives said that discussions between shareholders on a new agreement had no impact on ETLI’s business operations.
The pace of growth of ETIL during the pandemic has reinforced Edelweiss Group’s belief that the business may be IPO ready in the medium term. “While Tokyo Marine is keen to acquire a majority stake given Edelweiss’s focus on the insurance business, it does not intend to dilute its existing majority stake in ETLI,” said a group source.
According to Rujan Panjwani, Head of Insurance Cluster at Edelweiss, “ETLI has emerged as a high quality business over the past decade, making it one of the youngest and fastest growing life insurance players. Insurance India’s opportunity for the region is immense. Compelling and we at Edelweiss are committed to growing these businesses. We have a strong management team and a well capitalized and strong business that we believe in.”
In FY22, ETLI is expected to record a total premium of Rs 1,500 crore. About Rs 2200 crore has been invested in the company so far, of which Tokio Marine has invested Rs 1,600 crore and Edelweiss Rs 600 crore. The Japanese partner has three nominees on its 12-member ETLI board.
In addition to ETIL’s growth and expectations from the company, Edelweiss believes it has the capital to support the insurance business – thanks to the partial sale of the wealth management arm to PAG, an Asia-focused investment manager, earlier this year. Thanks, that made Rs 2,300 crore. Cash for Edelweiss. Recently, it sold a stake in the insurance broking business to American insurance broker Arthur Gallagher.
Based on the agency model (against the sale of insurance through bank branches) and focusing on term insurance and traditional products, ETLI was brought in by Tokio Marine, Japan’s first insurance company, especially during the first five years. Gained from the agency procurement strategy and actuarial model. The company was formed 140 years ago
“It will be interesting to see how Tokio Marine chooses to play in the Indian market and how the two partners strike a new deal.