Government-owned Syndicate Bank has shortlisted 12 insurance companies for a joint venture for its proposed foray into the life insurance business.
The list includes both players operating in India, as well as prospective foreign entrants. Among Indian insurers, Aviva Life, Birla Sun Life, HDFC Standard Life, Max New York Life and Metlife India Life have evinced interest in a joint venture with the Manipal-based bank. Two Japanese insurers, Mitsui Sumitomo Insurance Company Limited and Sumitomo Life Insurance Company, have also expressed interest in a venture with the bank.
Mitsui Sumitomo Insurance Company Limited is already engaged in the general insurance business in India through Chola MS General Insurance, in which it holds a stake of 26 per cent, with Chennai based Murugappa Group accounting for the remaining 74 per cent stake.
Syndicate bank's list of possible partners also includes Avantha Ergo, a joint venture between the Gautam Thapar-led Avantha Group and Germany's Munich Re group's direct insurance arm ERGO, which is yet to start operations.
| SHORTLISTED COMPANIES |
| BROWNFIELD |
| * Aegon Religare Life Insurance Co Ltd |
| * Aviva Life Insurance Co India Ltd |
| * Birla Sun Life Insurance Co Ltd |
| * Future Generali India Life Insurance Co Ltd |
| * HDFC Standard Life Insurance Co Ltd |
| * IDBI Federal Life Insurance Co Ltd |
| * ING Vysya Life Insurance Co Ltd |
| * Max New York Life Insurance Co Ltd |
| * Metlife India Life Insurance Co Ltd |
| GREENFIELD |
| * Avantha Ergo |
| * Mitsui Sumitomo Insurance (MSI) Co Ltd |
| * Sumitomo Life Insuance Company |
| Source: Syndicate Bank |
According to a senior Syndicate Bank official, the bank is open to both organic and inorganic possibilities for the insurance venture and is keen to start the insurance company by the end of the current financial year. “We are exploring opportunities in the insurance space. They are still at a preliminary stage. We have initiated talks with a few insurers but nothing has been finalised yet. We are open to all possible options—majority stake, minority stake, joint ventures and subsidiaries. We are yet to approach the regulators. We currently have no bancassurance tie-ups in life insurance business,” the official said. The bank had, in March, invited bids from the insurance companies for the venture.
Recently, Punjab National Bank (PNB), the second-largest lender in the country, announced its plan to enter the life insurance business. The bank plans to buy a strategic stake in an existing company and had, subsequently shortlisted three insurance companies—Bharti Axa Life, Aviva Life and MetLife. The deal is expected to be finalised by July.
Under the bancassurance model, banks offer their branch network as a low-cost distribution channel to insurance companies. Insurance companies are thus, always interested in tapping banks' resources. Last week, a committee set up by the Insurance Regulatory and Development Authority came out with a report which said banks should be allowed to tie up with two sets of insurance companies in the life and non-life segments to sell insurance products. Currently, Irda allows banks to tie up with only one life, and one general insurance company.
During the last few months, the insurance sector also witnessed a couple of other large deals. Earlier this month, Mukesh Ambani-promoted Reliance Industries announced its foray into the insurance sector, buying out Bharti Group's stake from its insurance joint ventures with French insurer Axa—Barti AXA Life and Bharti AXA General. Bharti Group held a 74 per cent stake in the insurance ventures, with AXA holding the remaining 26 per cent—the maximum permissible foreign direct investment limit in the Indian insurance sector.