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| 'We hope to finalise life insurance partner soon' | | Q&A: Andreas Kleiner, ERGO International's Board Member |
| Shilpy Sinha / Mumbai Nov 10, 2009, 00:34 IST |
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 ERGO entered India in 2007 through a general insurance joint venture with HDFC. It is currently finalising a life insurance partner. Andreas Kleiner, board member of ERGO International and responsible for Asia, talks to Shilpy Sinha about the group’s plans for India. Excerpts:
You called off your life insurance joint venture (JV) with Hero earlier this year. Are you looking at the life insurance segment aggressively?
We see substantial potential in the Indian market. The joint venture with Hero was called off because Hero wanted to focus on its core business of two-wheelers in the midst of the financial crisis. Hero also had to call off a JV with Daimler of Germany for producing trucks.
We have had discussions with numerous companies and some talks are at an advanced stage. We are hopeful of finalising our life insurance partner soon and plan to sign a letter of intent potentially as early as January 2010.
You entered the general insurance business by buying Chubb’s stake in HDFC’s non-life insurance. Will you consider buying stake in existing life companies to enter the segment?
We do not rule that out. We are here as a long-term player and would like to tie up with someone who will not look at exiting in another five-six years.
ING is looking at selling its life insurance business by 2013. AIG also wants to sell a part of its life insurance business in Asia. Are you looking at these options?
There are opportunities in the market. ING India has not approached us and we understand that neither Tata nor AIG want to sell their share in the Indian life JVs. Generally speaking, buying a stake in existing companies makes sense because you have licenses, distribution and branches in place. It helps you in a way, but comes at a price and could become an expensive proposition at the end of the day.
Why don’t you consider buying stake in Reliance Life?
We were approached through different sources and had very generic talks about acquiring a stake in the company. But we have decided not to pursue the matter further. As ERGO, we want to be present in a JV as a strategic investor and have limited interest in pure financial investments.
By when do you expect your non-life insurance business to be profitable?
We want the non-life business to be profitable by the next financial year (2010-2011). At the moment, the business is P/L negative since we are investing heavily into expansion by setting up offices and infrastructure. For the first five years, HDFC Chubb did not expand on a large scale. Now, both partners have agreed to scale up with the entry of ERGO in the JV.
Does the Indian market look more attractive now with the government raising foreign direct investment limit to 49 per cent, the insurance regulator coming up with norms for initial public offers and mergers and acquisition, and the low insurance penetration level?
Yes, definitely. The Indian market looks much more attractive. The Insurance Regulatory and Development Authority (Irda) has been a pro-active regulator in all aspects and we, of course, support the hike in the FDI limit to 49 per cent, hopefully sooner than later. We genuinely want to increase our stake in the non-life business as and when it happens.
What are your plans for China? How different is China’s market from India?
With a bit of luck, we will announce a tie-up soon. Life insurance business is different in India from China. As a foreign joint venture, you can only operate in one province initially under an insurance license, unlike in India, whereas you can be a pan-Indian company from day one of having a license.
Are you looking at entering other segments like asset management business?
Our sole business focus is insurance. So, going forward, we will concentrate on insurance. We have an asset management company called MEAG within the Munich Re group. However, the asset manager is primarily looking after managing the group’s assets only.
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