Birla, Sun Life To Invest Rs 500 Crore In Risk Jv

The A V Birla group and Canada's Sun Life Insurance would together invest Rs 450-500 crore in Birla Sun Life Insurance in the next five years.

The foreign partner would also raise its stake in the joint venture to 50 per cent when the foreign investment norms in the insurance business are relaxed.

"We are looking at an investment of Rs 450-500 crore in the next five years in the joint venture. This fiscal, the promoters will infuse about Rs 30-50 crore in the company," Birla Sun Life Insurance CEO Nani Javeri said here today.

He said the company started with an initial capital of Rs 100 crore and augmented the capital to Rs 150 crore by March 2002 on account of the growth in business. AV Birla group's Indian Rayon holds 70 per cent and another sister concern Birla Global Finance has four per cent stake in the life insurance company while remaining 26 per cent is with the Canadian insurer.

Referring to the 50:50 joint venture with the Canadian company in mutual fund, securities form, trustee and distribution companies, Javeri said the foreign partner was eager in hiking its stake in the life venture to 50 per cent when government eases the foreign investment norms. At present foreign investment in the insurance business is capped at 26 per cent.

Hike in stake by the foreign player comes in the wake of the higher capital infusion from promoters as the business grows. "We want to be top three private insurers in the next five years," Javeri said. This was based on the assumption that Life Insurance Corporation of India's market share comes down to 90 per cent and Birla Sun Life is able to acquire three per cent of the pie.

Birla Sun Life has already signed agreements with Citibank, Deutsche bank and was talking to other regional banks for distribution of its products when the Irda comes up with 'bancassurance' guidelines. The tie ups with banks is intended to accelerate the business growth for the company.

"The company has plans to sell nearly 90,000 policies in the current financial year as against 20,000 policies sold last fiscal, signifying a growth of more than 300 per cent," Javeri said.

The company targets a premium income of Rs 215 crore this fiscal as against Rs 36 crore in 2001-02, he added.

The company also plans to increase its reach to 14 cities and 22 branches from the present 16. The company plans to open offices in Jaipur and Chandigarh shortly.