Mumbai/Calcutta, May 13: The State Bank of India (SBI) today announced a general insurance joint venture with the Insurance Australia Group (IAG) and plans to commence operations in the current financial year.

While the SBI will hold a 74 per cent stake in the joint venture, the IAG will pick up the remaining 26 per cent stake, subject to regulatory approvals.

The joint venture comes at a time when the IAG is in the midst of a hostile takeover bid by another Australian general insurance company QBE Insurance Group.

The QBE made a $7.7-bn takeover bid for the IAG first on April 10.

According to The Australian, the bid offer has been extended till May 19.

Apart from QBE Insurance Group, others who are eyeing the IAG include Zurich Financial Services Group and the American International Group. The IAG is Australia’s largest insurer for car, home and weather, while the QBE is the country’s biggest insurer for casualty and property insurance.

Both the parties — the SBI and the IAG — have signed a memorandum of understanding for the purpose and both will now jointly work to finalise a shareholders’ agreement before approaching the regulatory authorities for their approval.

“Establishing a general insurance joint venture is a key element of the SBI’s strategy to pursue emerging, high-growth opportunities to build on our position as the pre-eminent financial services group in India,” Deepak Chawla, the State Bank’s deputy managing director (corporate strategy & new businesses), said.

“The IAG’s proven capabilities in technical and underwriting expertise, pricing and risk management, and its track record in working successfully with other partners in the Asian region, make it an ideal partner. We look forward to working together to grow a successful general insurance business,” Chawla said.

While the SBI has over 100 million customers and 10,000-plus branches all over India, the IAG underwrites more than Aus$7.5 billion of premium per annum.

The IAG has operations in Australia, New Zealand, Thailand, Malaysia, China, Singapore and the UK through various brands.