French insurer BNP Paribas Cardif is looking to sell its stake in SBI Life Insurance (SBI Life) marking the end of its two-decade long collaboration with India’s No. 1 bank.

BNP Paribas Cardif is classified as a promoter of the life insurer. At the end of December 2020, it held 5.2 crore shares in SBI Life equivalent to 5.20 per cent stake in the company.

The SBI Life scrip had ended at Rs 940 on Wednesday. The bourses were closed on Thursday on account of Mahashivratri. At this price, the value of the holding by the French firm stands at around Rs 4,888 crore.
A Moneycontrol report said that BNP Paribas Cardif is selling 3.5 crore shares or around 3.5 per cent SBI Life shares, which are being offered at Rs 870-Rs 917 each.

This represents a 2.45-7.44 per cent discount to the closing price of the SBI Life scrip on the BSE on Wednesday.

It also has the option to increase the deal size by another 1.5 crore shares or 1.5 per cent. If the second option is exercised, BNP Paribas would be left with only a 0.2 per cent stake.

It may be recalled that in June 2019, BNP Paribas Cardiff had sold a 2.5 per cent stake in SBI Life Insurance for about Rs 1,625 crore.

In March 2019, it had offloaded a 5 per cent stake for Rs 2,889 crore and another 9.2 per cent stake for Rs 4,751 crore in the life insurer.

The latest development comes at a time the Centre has raised the foreign direct investment (FDI) limit in insurance to 74 per cent.

Covid impact

During the quarter ended December 31, 2020, SBI Life reported a 40.2 per cent drop in net profit to Rs 232.85 crore largely because of a rise in Coronavirus-related provisions.

The insurance firm had posted a net profit of Rs 390 crore in the same period of the previous year.
During the period, net premium income rose to Rs 13,766.49 crore from Rs 11,694.51 crore.

The insurer had said that it has assessed the overall impact of the pandemic on its business and financials, including valuation of assets, policy liabilities and solvency for the reporting period and had made adequate provisions.

The period also saw its assets under management crossing the Rs 2-lakh-crore mark, rising 28 per cent year-on-year.

Its market share among private players rose to 23.7 per cent in terms of new business premium.
While renewal premium grew by 27 per cent, gross written premium increased 21 per cent to Rs 34,610 crore.