1

Team
Members
Rahul Nandi
Jiwan
Ankit Raj
Supratim Dhar
Case Study of IPO
of Insurance
Companies
 3

Insurance- A Good Investment Option ?

▫ Low Penetration- The ratio of premium to Gross Domestic Product (GDP) in India is
only 2.7 percent compared to a world median of 3.5 percent, or Thailand’s 4 percent or
South Africa’s 11 percent. This makes Life insurance an exciting high growth sector.
▫ Underinsurance- We not only have the issue of lower penetration, but also under-
insurance. People who are aware and have taken an insurance policy are grossly
underinsured. Both these factors mean faster growth opportunities.
▫ Fastest growing economy - Our population is only growing at about 1.2 percent.
This means, the per capita income will grow at a much more rapid pace. This leaves space
for fast growth.
▫ High Growth- New business in life insurance premium has increased at a Compound
Annual Growth Rate (CAGR) of 24.3 percent for 2015-17. Life insurance companies enjoy a
lower corporate income tax rate of 14.3 percent.
ICICI Lombard 1
 5
Why ICICI Lombard?

The loss ratio has headed south,

ICICI Lombard General Insurance Company Ltd
driving a decline in the combined ratio.
founded as a joint venture with ICICI Bank
Prudent management translated into
Limited, is engaged in providing various general
superior return on the gross
insurance products and services in India. They
investments too. Consequently,
mainly offers fire, engineering, hull, aviation,
company’s PBT grew at brisk 18 per
motor, casualty, health, travel, energy, personal
cent per annum during FY14-17..
accident, marine, liability, home, rural, and
2014
credit insurance products
2000 and services.

2004 2017

ICICI Lombard’s valuation is high considering

The company has delivered a strong
growth in GDPI and has been successfully
maintaining its leadership position
amongst the private sector non-life
insurers through various cycles of
industry evolution since FY04.
the RoE of 17.2 per cent for FY ended March
2017, loss ratio of 80.6 per cent and the
combined ratio of 104 per cent is lower than
the average of private peers. Moreover, the
nonlife insurance segment is underpenetrated
in India and the company’s financials are
 6

IPO Data

Issue Issue Min.

Issue Face Issue
Open Close Application Listing At
Type Value Price(Rs) Lot
Date Date
Book-
15-Sep-17 19-Sep-17
Building 10 651-661 22 BSE, NSE
 7

₹ 14,542.00
Minimum Investment Amount

₹ 5614.69-5700.94 Cr.
86,247,187 shares;
Issue Size(In cr)

2.98x
Total IPO Size
Subscribed
 8

Merchant
Banks
 9
Why IPO?

1. To achieve the benefits of listing the Equity Shares of the

Company on the Stock Exchanges;
2. To carry out the sale of up to 86,247,187 Equity Shares by
the Selling Shareholders; and
3. Enhance the “ICICI Lombard” brand name and provide
liquidity to the existing shareholders.
 10

SBI Life Insurance

▫ Incorporated in 2001, a joint venture between
SBI and BNP Paribas Cardiff.
▫ SBI Life was the second indian life insurer to
go public after ICICI Prudential Life Insurance. 
▫ SBI Life has a portfolio of 37 individual and
group products, including a range of
protection and savings products to address
the insurance needs of diverse customer 2
segments.
▫ Company had an Asset Under Management of
97,736.6 crore as of 31 March,2017.
 11

Reason for Selecting

▫ Largest private life insurer in India in terms of business premium

generated each fiscal year since 2010
▫  Vast multi-channel distribution with pan-India presence (Branches,
Agents and Online)
▫ Oversubscribed 1.41 times overall and 3.6 times on last day
▫ Strong capital base. Company has not required additional capital
infusion since 2008.
 12

Why IPO? Issue Date Sept 20,2017 – Sept 22,2017

Issue Type Book Building
• To enhance the ‘SBI Life’ brand name and Issue Size 120,000,000 equity
to provide liquidity to the existing shares(aggregating upto Rs.
shareholders. 8400 crore)
• Raising capital to emphasize on digital Face Value Rs 10 per Equity share
platform and to develop new offices. Price Band Rs 685 – 700 per equity share
• To carry out the sale of up to 120,000,000 Issue Price Rs 700 per equity share
Equity Shares by the Selling Shareholders. Min. Rs.14700
Investment
Min. 21
Application
lot
Listing At BSE, NSE
 13

Lead Banks
▫ Axis Capital Limited
▫ BNP Paribas
▫ Citigroup Global Markets India
▫ Deutsche Equities India Private Limited
▫ ICICI Securities Limited
 14

General Insurance Corporation of India

Incorporated in 1972, General Insurance Corporation of
India is the largest reinsurance company in India in terms
of gross premiums.
They develop their overseas business through their
home office in Mumbai, branch offices in London, Dubai
and Kuala Lumpur, a representative office in Moscow, a
subsidiary in the United Kingdom that is a member of
Lloyd’s of London and a subsidiary in South Africa.
It provides reinsurance across many key business lines
including fire (property), marine, motor, engineering,
agriculture, aviation/space, health, liability, credit and
financial and life insurance.
 Why GIC Re ?

1. Leader in Indian reinsurance industry with 44 years of experience.

2. GIC is an international reinsurer that underwrote business from 161 countries as at June 30,
2017. Corporation ranked as the 12th largest global reinsurer in 2016 and the 3rd largest
Asian reinsurer in 2015, in terms of gross premiums accepted.
3. The Rs 11,370-crore initial public offer (IPO) of General Insurance Corporation, which was
opened during October 11-13, was oversubscribed 1.38 times.
4. Diversified product portfolio and revenue streams.
 

 
 17
IPO Data
Issue Open Date Oct 11,2017 Fresh Issue 17,200,000 Eq Shares
of Rs 5
Issue Close Date Oct 13,2017 Minimum Investment 14,592.00
Amount
Issue Type Book-Building Issue Size(In cr) 10661.9 - 11372

Face Value Rs 5 per equity share

Issue Price(Rs) Rs 855- Rs 912 Per

equity share
Min. Application Lot 16

Listing At BSE,NSE

offer for sale 107,500,000 Eq share

of Rs 5
 Objective of IPO

1. GIC intends to support the growth of its business and to maintain current solvency levels
and,
2. For general corporate purposes.
3. GIC’s initial share sale is part of the Union government’s divestment plan, under which the
department of investment and public asset management has appointed bankers to sell
government stakes across over a dozen public sector enterprises through IPOs.
 Merchant Banks

1. Citigroup
2. Axis Capital
3. Deutsche Bank
4. HSBC
5. Kotak Mahindra Capital Co. Ltd
▫  

▫  
HDFC Life Insurance 4
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Why HDFC Life Insurance?

HDFC Life is one of the leading life insurance
companies in India that offers a range of
individual and group insurance solutions that
meet various needs such as Protection,
Pension, Savings & Investment, Health, Child
and Women’s plans. HDFC Life is a joint
venture between HDFC Ltd (61.52%) and UK’s
Standard Life (35%).
2000
HDFC Life had decided to go for the
IPO, dropping its original plan to
complete its merger with Max Life
Insurance Co. Ltd, which could have
led to an automatic listing for the
merged entity. The two companies
called-off the merger due to a
regulatory hurdle.
April 2017

2016 November
2017

HDFC Life’s embedded value had risen to
Rs12,390 crore, as on 31 March, 2016. This meant
the actual value of the insurer could be at least Rs
37,000 crore. Total income was Rs 22,189 crore
and the net worth stood at Rs3,839 crore as on 31
March.
HDFC Life filed its DRHP with the SEBI ahead of
launching its IPO to sell a 14.97% stake. As per the
prospectus, HDFC would dilute about 9.55% stake
and Standard Life will offload about 5.42% in the
IPO. By valuation, the value of the 14.97% stake on
offer via IPO could be pegged at about Rs5,500
crore.
 22

IPO Data

Issue Issue Minimum

Issue Face Issue Listing
Open Close Applicatio
Type Value Price At
Date Date n Lot
Book- Rs10 Rs 275-290 BSE
Nov 7, 2017 Nov 9, 2017 per Equity per Equity 50
Building share Share NSE
 23

₹ 14,500.00 Minimum Investment

Amount

₹ 8245.26-8695.01 Crores
Issue Size(In
cr)

21,976,243 shares Total IPO Size

HDFC Life's initial public offer was subscribed 4.9 times by the end of the third day,
with the insurer receiving bids for 1.08 bn shares as against 219.76 mn shares on offer.
 24
Merchant Banks
• CLSA India Private Limited
• Credit Suisse Securities (India) Private
Limited
• Edelweiss Capital Limited
• HDFC Bank Limited
• IDFC Bank Limited
• IIFL Holdings Limited
• Morgan Stanley India Company Private
Limited
• Nomura Financial Advisory And Securities
(India) Private Limited
 25
Why IPO?
1. To achieve the benefits of listing the Equity Shares on the Stock Exchanges.
2. To provide liquidity to existing shareholders.
3. To increase its major areas of operations from the existing 4 Metropolitan Cities:
Delhi, Mumbai, Bangalore & Kolkata.