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Informist, Wednesday, Jun. 25, 2025
 

By Sagar Sen and Priyasmita Dutta

 

NEW DELHI – State-owned Punjab National Bank is aiming to sell up to 13% of the total 23% stake in Canara HSBC Life Insurance Co. Ltd. through an offer for sale when the life insurer launches its initial public offering, Ashok Chandra, managing director and chief executive officer of the bank, said. "The insurance company is likely to launch its IPO in Oct-Dec," Chandra told Informist.

 

Canara HSBC Life Insurance had filed in April a draft red herring prospectus with the Securities and Exchange Board of India for an initial public offering. Chandra refrained from divulging the size and timing of the offering. 

 

Currently, there are four listed life insurance companies in the country — Life Insurance Corp. of India, SBI Life Insurance Co. Ltd., HDFC Life Insurance Co. Ltd., and ICICI Prudential Life Insurance Co. Ltd. In terms of first-year premiums for 2024-25 (Apr-Mar), Canara HSBC Life Insurance was the 13th largest and collected INR 30.55 billion till Mar. 31, 2025.

 

The average trailing price-to-earnings ratio of these four listed life insurance companies is 64.84 on the basis of Tuesday's closing share prices. The 23% stake held by Punjab National Bank in the insurer originally belonged to Oriental Bank of Commerce until it merged with the larger peer in 2020.

 

Punjab National Bank holds 218.50 million shares in Canara HSBC Life Insurance. A back-of-the-envelope calculation based on the valuation of listed life insurance companies suggests the bank may get around INR 8 billion from the stake sale. At 1501 IST, shares of the bank were 0.7% higher at INR 105.95 on the National Stock Exchange. 

 

Canara HSBC Life Insurance, which was incorporated in 2007, is a joint venture between Canara Bank, which holds 51% stake, and HSBC Insurance (Asia Pacific) Holdings Ltd., which holds 26%.

 

According to the draft red herring prospectus, the life insurer reported a net profit of INR 1.13 billion in FY24, up 24% on year. In FY25, till December, the company had posted a net profit of INR 849 million, up 10% on year. The total annualised premium equivalent was at INR 17.14 billion, up 45% from INR 11.82 billion a year ago. The value of new business was INR 3.02 billion as of Dec. 31, 2024, while the value of new business margin was 17.61%. The draft papers pegged the embedded value of the insurer at INR 59.30 billion as of Dec. 31, 2024. The solvency ratio of the insurer was at 215% as of Dec. 31, 2024 as against 212.83% as of Mar. 31, 2024.

 

The life insurer's 13-month persistency, which is an important indicator of customer retention, was 83.45% for the nine months ended Dec. 31, 2024, up from 79.55% a year ago. The 61-month persistency was 56.89% as of Dec. 31, 2024, up from 54.57% a year ago.

 

SBI Capital Markets Ltd., BNP Paribas, HSBC Securities and Capital Markets (India) Pvt. Ltd., JM Financial Ltd., and Motilal Oswal Investment Advisors Ltd. are the book-running lead managers for the initial public offering.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Tanima Banerjee

 

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