Swiss Re To Buy 23% Stake In Paytm Insuretech For Rs 290 Cr. Know How It Aims To Tap The Market

The stake buy will help Swiss Re and Paytm to work towards closing the insurance protection gap in the market.

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New Delhi: In the latest acquisition, digital payments and financial services firm Paytm on Wednesday announced Switzerland-based reinsurance major Swiss Re will buy a 23 percent stake in Paytm Insuretech for about Rs 920 crore.

How will investment help Paytm Insuretech?

With the investment, Paytm's insurance unit Paytm Insuretech (PIT) looks at leveraging Paytm's customer base and merchant ecosystem to develop innovative insurance products.

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The stake buy will help Swiss Re and Paytm to work towards closing the insurance protection gap in the market. "Swiss Re will invest (by way of equity shares and compulsorily convertible preference shares) approximately Rs 9,200 million (Rs 3,973 million upfront, and the remaining in tranches, subject to fulfillment of certain milestones) in the PIT for an aggregate stake of 23 percent on a fully diluted basis," Paytm said in a statement.

Gross written premium for non-life insurance is expected to increase from $27 billion as of FY21 to $50-60 billion FY26, according to RedSeer data.

Under the arrangement in the deal, Rs397 crore will be paid upfront, and the remaining in tranches, as per the Mint report.

India's insurance market offers a significant opportunity due to the market's protection gap and under-penetration compared to the global average.

The development follows the acquisition of Raheja QBE by Paytm Insuretech. "We are excited to partner with Swiss Re for our insurance foray as a key strategic investor. It is an important milestone in our financial services journey of taking general insurance products to the masses,” said Paytm chairman, MD, and CEO Vijay Shekhar Sharma.

"We look forward to gaining from Swiss Re's global insurance capabilities and building innovative products to tap into the Indian market". Sharma will also make an investment in PIT in his personal capacity along with Swiss Re.  However, the company did not disclose the investment details that Sharma will make in PIT.

The investment by Swiss Re and the acquisition of Raheja QBE by Paytm Insuretech is subject to regulatory approvals.

(With inputs from PTI)