Edelweiss Financial Services plans to invest Rs 800 crore in insurance biz

Edelweiss Financial Services plans to invest Rs 800 crore in its life and general insurance businesses over the next three-four years.

While being committed to support business, the company is also open to give higher stake to foreign partners in the insurance company to scale up the venture. The financial services firm has three units in insurance space — life insurance, non-life, and broking. In the general and life insurance businesses, the company expects to invest Rs 100 crore a year in the next three-four years. 

Edelweiss Financial Services Chairman Rashesh Shah, in an analyst call, said the idea was to do whatever was right for the business. “If the partner comes and invests more in the business to grow it faster, well and good. The company can consider any structure that is allowed under the rules. The rules for foreign direct investment (FDI) are becoming more favourable.”

Insurance is a big growth area, he said. “The more capital you pump in, the more it will support growth over 10 years. Both companies are well positioned, though they are still small.”  In the broking segment, foreign investors can hold 100 per cent stake, and the government announced in the Budget 2021-22 its plan to hike the FDI limit in insurance company to 74 per cent from the current cap of 49 per cent.

Currently, Gallagher owns 30 per cent in the broking venture, Shah said. It valued the business at Rs 240 crore two years ago and the business has almost doubled in profitability. Edelweiss owns 51 per cent in the life insurance business, which has an equity base of Rs 623 crore. Tokyo Marine is its foreign venture partner. 

The company reported 4.76 per cent growth in premium income at Rs 290.8 crore in 10 months of the current financial year, according to the Life Insurance Council data. Its posted a loss of Rs 167 crore in nine months ended December 2020.

General Insurance Company, where the firm holds 100 per cent stake, posted about 50 per cent growth in premium income at Rs 176.05 crore till January 2021 against Rs 117.45 crore in 10 months till January 2020, according to data. The company with an equity base of Rs 115 crore reported a loss of Rs 66 crore in nine months ended December 2020.