Magazine
Allianz SE, one of Europe’s largest insurers, is considering an exit from its long-standing joint ventures with the Bajaj Group in India, marking the potential end of their 23-year partnership. Allianz holds a 26% stake in both Bajaj Allianz Life Insurance and Bajaj Allianz General Insurance, while Bajaj Group controls the remaining 74% through Bajaj Finserv. This move is driven by Allianz’s inability to play a significant role in the joint ventures due to its minority stake, as well as a shift in strategic priorities.
When the joint venture (JV) was formed in 2001, Allianz had the option to increase its stake to 74% at a predetermined price, in line with the then foreign direct investment (FDI) cap. However, this option lapsed in 2016 due to regulatory changes, which now require such deals to be conducted at fair market value. Since the FDI cap for the Indian insurance sector was increased to 74% in 2021, Allianz has been unable to raise its stake, limiting its control over business decisions.
Discussions between Allianz and Bajaj are still in the preliminary stages, with no formal proposal submitted to Bajaj Finserv or its insurance subsidiaries. In a stock exchange statement, Bajaj Finserv confirmed that while Allianz is considering an exit, no final decision has been made, and Allianz has committed to ensuring a smooth transition if it proceeds with its exit
The valuation of Bajaj Allianz Life Insurance could become a key negotiating point if Allianz exits. The embedded value (EV) of Bajaj Allianz Life Insurance for FY24 is ₹21,726 crore, up 16.9% from ₹18,584 crore in FY23. A life insurance deal could potentially fetch 4-5 times the embedded value, depending on market conditions and investor interest.
Allianz has stated that it remains committed to the Indian insurance market but will not speculate on future alternatives at this stage.
