Global firm EY has been selected to advise on the biggest Indian insurance merger in recent years.

EY’s consulting services will advise the merger of three insurance entities in India. The large scale move involves the National Insurance Company, Oriental Insurance Company, and also United India Insurance Company.

Indian insurance merger

The Indian insurance merger was decided by the Indian government in its recent budget. A number of firms made bids to win the lucrative adviser contract. The three firms have a combined premium value of Rs. 41,000 crore ($5.8bn). In addition, they produce over 200 products and services for the Indian insurance market.

Market share of the deal will be around 35% and the collective net worth of the three stands in excess of Rs. 9,000 crore.

Furthermore, it will result in a massive operation across 6,000 offices and over 44,000 employees.

EY will offer support for a number of tasks. These includes making crucial changes to the overall structure of the organisation, assessment and optimisation of the available staff, and solving operational hurdles. In addition, it will help the new organisation remain compliant with the regulatory framework.

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The contract lasts until the new organisation has been established and has attained a degree of operational stability. The entire process will conclude within the ongoing fiscal year, following which the new entity will be the largest non-life insurance company in the country with a value of over 1.2 lakh crore.

The move comes at a time when the investment levels for the insurance sector in India are far exceeding the revenues, which has necessitated the merger.

Other deals

Some firms are actually leaving the market. Fairfax Financial is reportedly planning to further dilute its shareholding in India’s ICICI Lombard General Insurance.

Two sources familiar with the development told that the Canadian company will soon roll out a block trade to divest its stake.

However, the sources did not reveal the size of the stake that will be up for sale.