Standalone health insurer to be merged into non-life company

HDFC, India's largest mortgage financier, has agreed to acquire the entire 50.8% stake of Apollo Hospitals Group in a health insurance joint venture with German reinsurer Munich Re Group as part of its strategy to tap the market.

HDFC is acquiring the stake in standalone health insurer Apollo Munich for INR13.36bn ($193m). It will pay an additional INR108.4m to employees of Apollo Munich to purchase their 0.4% stake in the company. This makes HDFC's total stake 51.2%.

HDFC will merge Apollo Munich with its own general insurance company HDFC Ergo, making this combined entity the second largest private insurer in the accident and health segment. Munich Health Germany will hold a 49% stake in the merged entity.

The merged entity of HDFC Ergo and Apollo Munich will have a market share of 8.2% in the health and accident segment. In the overall non-life insurance segment, it will have a market share of 6.4%.

For Apollo Hospitals, besides the INR13.36bn from HDFC, it will receive INR2.94bn from Munich, leading to a total of INR16.3bn.

The merger, when completed, will reduce the number of standalone health insurers in India to six from seven at present.