New Delhi: Allstate Insurance Company Ltd.
on Tuesday sought a regulatory approval for its merger with insurance firm Mercury Insurance Co. , with the aim of boosting its financial strength and providing a cheaper insurance product.
In a filing to the Securities and Exchange Board of India, Allstate said it wants the regulator’s consent to initiate the merger.
Allstate’s acquisition of Mercury will enable the company to offer a single insurance product with its global portfolio of products.
The proposed transaction, if approved, will increase Allstate’s insurance portfolio by more than 20 per cent, the filing said.
The two companies said they would enter into a memorandum of understanding in 2019 to combine their respective business segments.
They said they have been working towards such a merger for more than a decade.
The filing said the transaction would enable the merger to enhance synergies, reduce duplication, and reduce risk of financial losses.
In February, Allseas chief executive Amit Singhal told the Wall Street Journal the merger was “very close” and “very ambitious”.
Singhal has been in a feud with rival BSNL Ltd over the company’s decision to cut losses on the Mumbai-Delhi Metro Rail Corporation (DMRC) in March, citing a reduction in profit margins.
Allseas has come under pressure from the DMRC over a lack of transparency around how the rail project will be funded, which the company claims is a matter of “disregard” of regulators.
Singhal had on Tuesday told reporters the merger will benefit the company in terms of financial strength.
“We believe the combined company will deliver better financial performance, which will improve the overall profitability of the company,” Singhal had said.
The deal will allow Allstate to expand its business in the Mumbai metropolitan area, where it has about 20 per year of coverage, the company said.
A merger of Allstate and Mercury would make the company the third-largest insurer in India, after the state-owned National Association of Insurance Providers (NAIP) and the Indian Automobile Insurance Corporation (IACIC).
The IACIC is India’s biggest insurer with about 35,000 members, with about 2,400 members in Mumbai.
The company is part of the IACICA Group, which also includes the state of Gujarat.