Promoters of Go Digit apply for life business licence

MUMBAI: Promoters of IPObound Go Digit General Insurance, the Prem Watsa-led Fairfax Group and Kamesh Goyal, have filed an application with regulator Irdai for setting up a life insurance company. The last company to have received a licence for life insurance was Edelweiss in 2011.
Go Digit Insurance’s promoters have also made an application for setting up a reinsurance company in India, which will be the first in the private sector. While in the reinsurance proposal, the promoters have made an R2 application, the life proposal is still in R1. Irdai follows a three-stage licence process where R1 is the application stage, R2 is the in-principal approval stage and R3 is the final approval.

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The company has decided to pursue plans for a separate life company despite there being some talk about the regulator considering composite licences in future. Fairfax is promoted by Canadian billionaire Watsa who was originally joint promoter of ICICI Lombard General Insurance. Watsa had exited ICICI Lombard, selling his stake in two phases for Rs 2,627 crore and Rs 2,562 crore.
Go Digit insurance is in the process of filing its draft prospectus for an initial public offering (IPO) of around 10% of its equity as over 15% of stake has already been sold to financial investors. The company was valued at around $3. 8 billion during a fundraise last year. Given the valuation of over Rs 30,000 crore, the IPO size is likely to be in the region of Rs 3,000 crore and will include both new shares and offer for sale from existing investors.
Although positioned as new age insurance company and a startup, Go Digit General Insurance has a model different from startup companies that are yet to focus on profitability. While the company is yet to achieve profits in Indian accounting, it is profitable under IFRS where acquisition costs are amortised. Another differentiation from other startups is that there are no options for founders, and everyone gets option at the market value. The company has acquired a substantial chunk of the motor insurance market and has plans for health insurance.