ING Life turnaround makes partner hunt easier for Exide

Automobile battery major Exide’s investors will likely welcome the turnaround in fortunes of ING Vysya Life Insurance, a hitherto struggling life insurer that the former took full control of in January.

Last fiscal proved a turning point for ING Vysya Life as profit stood at a decent Rs 23.07 crore, a contrast to the Rs 31.15 crore loss the previous fiscal. But it posted only a 4% growth in premium income at Rs 1,736.72 crore, on the back of its small base and a market share of under 2%.

The turnaround could now help Exide’s promoters, the Rajan Raheja group, to find new partners at attractive valuations.

In January, Exide had raised its stake from 50% to 100% for Rs 550 crore, thus valuing ING Vysya Life at Rs 1,100 crore. The insurer’s reserve stands at a negative Rs 1,126 crore as at March-end. Its asset base stands at Rs 7,211 crore, including investments of Rs 3,802 crore.

Back then, Exide said it took no loans but relied on internal accruals to fund the acquisition of 50% additional stake, and that it would start scouting for a foreign partner to dilute its 100% stake by up to 26%.

Exide remains debt-free. What’s more, ING Vysya Life’s 4% growth in premium income appears laudable as the broader life insurance market saw a dip in new business premium collection during the year.

For instance, ICICI Prudential Life’s net profit rose just 8% to Rs 1,496 crore while SBI Life  reported a moderate 12% growth in profit at Rs 622 crore.

In January, Exide bagged the additional 50% stake by buying out the 26% stake of Dutch partner ING Insurance International, the 16.32% stake of the Hemendra Kothari group and the 7.68% stake of the Enam group.