ICICI Pru Life likely to take over Sahara Life’s insurance biz

ACCORDING TO IRDAI, SAHARA LIFE COLLECTED ₹140 CR IN RENEWAL PREMIUM IN 201314, BUT BY 201516 THIS FELL TO ₹114 CR

ICICI Prudential Life Insurance Co Ltd has offered to take over the life insurance business of Sahara India Life Insurance Co Ltd, which was effectively wound up by the regulator last month.

“ICICI Prudential Life has agreed to take over the policyholders’ liabilities of Sahara Life and has already commenced valuing the liabilities of the policyholders and earmarking the matching assets of Sahara Life,” said Nilesh Sathe, member, life, at the Insurance Regulatory and Development Authority of India (IRDAI). “They will transfer on their books policyholders’ liabilities and corresponding assets. We have given them three weeks to submit the valuation report, which will be reviewed by us.”

ICICI Prudential, which is a listed company, informed the stock exchanges about its interest in taking over Sahara Life’s business.

“We have expressed our interest to evaluate taking over policyholders’ liabilities and assets of Sahara Life. We are evaluating the way forward on the same. The last reported policyholders’ liabilities of Sahara Life is about ₹900 crore , which is less than 1% of the company’s balance sheet size,” it said.

This also indicates that a takeover is not binding on the insurer. “We will make a final proposal to IRDAI post completion of this exercise,” said Sandeep Batra, executive director at ICICI Prudential.

On Tuesday, ICICI Prudential shares rose 3.66% on the BSE.

The administration of Sahara India Life, a subsidiary of Sahara Group, was taken over by Irdai on June 12. On June 23, IRDAI asked the company to stop issuing new policies, the first time in its 18-year history that the regulator had taken such a step.

Subsequently, IRDAI offered six insurers — Life Insurance Corporation of India, ICICI Prudential Life, HDFC Standard Life Insurance Co Ltd, Bajaj Allianz Life Insurance Co. Ltd, Kotak Mahindra Old Mutual Life Insurance Co Ltd and SBI Life Insurance Co Ltd — a chance to take over Sahara Life’s insurance business.

Sathe said the transfer of Sahara Life’s business to ICICI Prudential should be completed in a couple of months. As per the annual report of IRDAI, its assets under management (AUM) stood at around ₹1.02 lakh crore, compared to Sahara Life’s AUM of ₹1,142.48 crore in FY16.

“In case a large insurer like ICICI Pru were to take over Sahara Life, the portfolio size of Sahara Life is very small to impact ICICI Pru in any way. However ICICI Pru will definitely benefit as it can access the markets in UP further where Sahara Life has a presence. Also given the large AUM of ICICI Pru, in theory customers of traditional plans should benefit as fixed costs get apportioned over a larger base,” said Shashwat Sharma, partner and head of insurance at KPMG India

According to Sanjay Agarwal, whole-time director and CEO, Sahara Life, the company will be making a representation to the regulator that policyholders’ interests had never been compromised. The company is hoping that the regulator will review its decision, he said. Sahara has filed a defamation case in a Patna court against Mint’s editor and some reporters over the newspaper’s coverage of the company’s dispute with the Securities and Exchange Board of India. Mint is contesting the case.