Munich Re will acquire an additional 23.27 percent of shares of Apollo Munich Health Insurance Co. Ltd., from its joint venture partner, the Apollo Hospitals Group, India, increasing its shareholding from 25.5 percent to 48.75 percent.
Representatives of both companies signed a share purchase agreement on Jan. 25, agreeing to a purchase price of 1.635 billion Indian rupees ($24 million).
Upon completion of the transaction, the share ownership in Apollo Munich Health Insurance of Munich Re and Apollo Hospitals Group will be 48.75 percent and 51.1 percent, respectively, with the balance held by employees. The purchase price refers to a total value of 7.03 billion Indian rupees ($104 million) of the company.
With the share acquisition, Munich Re will strengthen the presence of its Munich Health field of business in India – one of its key markets – and continue to pursue its profitable growth strategy, Munich Re said in a statement.
Apollo Munich Health Insurance, one of the largest private sector health insurance companies in India, offers comprehensive health insurance plans for individuals, families, senior citizens and corporates. The wide array of products cover health insurance, travel insurance and personal accident insurance plans.
The company has approximately 8 percent of the retail health insurance market in India, with over 4 million members and 100 offices across the country. It distributes its products through agents, bancassurance, corporate agents, strategic partners, sales associates and direct channels.
In the financial year 2015, its gross written premium income stood at 8.60 billion Indian rupees ($126 million) and a profit before tax of 7 million Indian rupees ($103,000).
A Munich Re spokesperson said Apollo Munich Health Insurance is a “very young company,” having started operations in 2007. Taking into account that it has made significant investment in sales channels and distribution networks, its current profitability is good — with good future growth potential, the spokesperson added.
“India’s population structure, increased life expectancy and positive economic development will usher in a steep rise in medium-term healthcare spending,” said Doris Höpke, member of the Munich Re board of management responsible for Munich Health.
“Since its start in 2007, Apollo Munich Health Insurance has shown exceptional, often above-market growth rates. With the increased stakeholding, we are strengthening our position for sustainable and profitable growth in this region. Apollo Munich Health Insurance is committed to make quality healthcare easy and accessible,” Höpke added.
The opportunity for Munich Re to increase its shareholdings in Apollo Munich Health Insurance resulted from a decision by the Indian government in March 2015 to increase the foreign direct investment cap in the insurance sector from 26 percent to 49 percent.
Completion of the transaction is subject to regulatory approval, which is expected at the end of the second quarter of 2016.
Munich Health was established in 2009. It is one of three business segments within Munich Re, alongside primary insurance and reinsurance. Its purpose is to pool Munich Re’s global health expertise in reinsurance, primary insurance and risk-management.
Munich Health serves insurance companies in more than 40 countries, and primary insurance clients in over 100 countries. In the financial year 2014, Munich Health achieved a profit of 109 million euros ($115.6 million) on premium income of over 5.3 billion euros ($5.6 billion).
Source: Munich Re