Global interest in India’s insurance sector picked up momentum on Thursday as the UK’s Prudential PLC and Germany’s Allianz SE sought out local partners to gain a foothold in India’s growing insurance market.
London-based multinational insurance and asset management company Prudential PLC will foray into India’s standalone health insurance market with one of the oldest IT companies from India — HCL Group — as a partner.
“Subject to obtaining regulatory approvals, Prudential Group Holdings Limited, a UK subsidiary of Prudential plc, will hold a 70 per cent stake in the joint venture, while Vama will hold the remaining 30 per cent stake,” the British firm said. Vama Sundari Investments (Delhi) is HCL group’s promoter company
“India is a key market for Prudential, and we have a deep connection with the country having opened our first branch in Calcutta in 1923. Today, we have a significant presence with life insurance and asset management businesses providing a comprehensive offering of insurance and wealth products,” said Anil Wadhwani, chief executive officer, Prudential plc.
Prudential already has a presence in India through its 22 per cent stake in ICICI Prudential Life Insurance and a 49 per cent stake in ICICI Prudential AMC. Wadhwani said that Prudential is evaluating a potential listing of the asset management business to partially divest shares and unlock capital for the shareholders.
Meanwhile, Bloomberg has reported that billionaire Mukesh Ambani’s Jio Financial Services has reached a preliminary agreement with Allianz SE to form an insurance business in India. The move closely follows Allianz’s decision to sell its stake in the joint ventures (life and general insurance) with the Bajaj group.
While Allianz will look for a majority stake, if that is not feasible it could also explore securing governance rights with a path to taking control in the future. Jio and Allianz are seeking a tie-up for both health and general insurance. No confirmation was immediately available from both Jio Financial and Allianz.
Policyholder benefit
In a bid to widen the insurance net, the government has proposed to open up the insurance sector to 100 per cent foreign direct investment along with introducing a slew of regulatory changes such as allowing private equity firms to directly invest in insurance companies in an effort to attract more capital in the industry.
With global reinsurance major Swiss RE projecting India’s insurance market to be the G20’s fastest growing over the next five years, total premium volumes (life and non-life) are expected to growth 7.3 per cent in real terms on an average each year. The combination of these seems to have stoked the interest among global firms.
With life insurance penetration at a level of 3 per cent (in FY23) and life insurance density of $70 compared with the global average of $354, the entry of new players will play a crucial role to not only increase reach but also stabilise a spike in premium on the back of more competition.
“Foreign players can bring in their technology and best practices and create a healthy competition which works in favour of the customer and the industry alike,” an industry source said.
