Mumbai, Oct. 30: HDFC Ltd, the leading housing finance company in the country, today picked Ergo International AG as the new joint venture partner for its general insurance business.

Under the agreement, Ergo, a group company of Munich Re, the world’s second biggest reinsurance company, will pick up a 26 per cent stake in HDFC General Insurance Ltd. This is the maximum stake that a foreign firm can buy under the existing insurance regulation.

The new company will be named HDFC Ergo General Insurance Ltd.

In 2002, HDFC had tied up with Chubb Corporation to float HDFC Chubb General Insurance Company Ltd. The US-based Chubb had a 26 per cent stake in the venture. However, in May this year, Chubb walked out of the venture selling its entire holding to HDFC for an undisclosed amount. Following this, the venture became a 100 per cent subsidiary of HDFC.

“We are convinced that Ergo will bring its vast expertise and top-quality technical and operational know-how to the joint venture,” HDFC chairman Deepak Parekh said.

“HDFC is one of the leading financial services conglomerates and the premier housing finance institution in India. We believe that HDFC and Ergo are a perfect fit and both will benefit from the ongoing growth of the Indian insurance market,” Nikolaus von Bomhard, CEO of Munich Re Group, said.

During its search for a new partner, HDFC had shortlisted three foreign companies and finally zeroed in on Ergo.

HDFC also runs a life insurance firm in a joint venture with the UK’s Standard Life.