Nandini Goswami

Kolkata: It’s official now. Housing Development Corporation (HDFC) has formed a new joint venture general insurance company with Ergo, the insurance arm of Munich Re.

The housing finance company has agreed to sell 3.25 crore equity shares of Rs 10 each, representing 26% of its paid up equity, to ERGO International AG, subject to receipt of requisite approvals.

DNA Money had first reported on October 16 on the partnership between the two.

“With the joint venture, two strong partners with an excellent strategic, operational and cultural fit have come together to form a powerful venture in the Indian general insurance market. The new company will be headquartered in Mumbai”, a HDFC release said.

Deepak Parekh, chairman of the board of HDFC and Nikolaus von Bomhard, CEO, Munich Re, signed a joint declaration in New Delhi on Tuesday. This was done in the presence of German Chancellor Angela Merkel and Prime Minister Manmohan Singh.

HDFC Ltd and ERGO intend to complete the proposed transaction by the end of 2007.

After severing ties with joint venture partner Chubb, HDFC is expected to bring around a turnaround in its general insurance business in the coming months.

It will be interesting to note the growth in the company’s business on the commercial insurance side. This was a drag on the company because of Chubb’s differing risk appetite. The first six months of the current fiscal has seen a 23% growth in business to Rs 112.03 crore.

Source : DNA