Tatas not in hurry to buy AIG stake in life venture

With Prudential calling off plans to acquire AIG’s Asian life insurance unit, the Tatas — who have a 74:26 joint venture with AIG called Tata AIG Life — are unlikely to buy the stake held by their foreign partner immediately.

The Tatas were in advanced talks to buy AIG’s stake as rules prohibit one player from holding shares in two insurance ventures in the same segment. Prudential — a partner of ICICI Bank’s life insurance joint venture — would have had to sell the stake in Tata AIG if it had acquired the same (if the AIA deal had gone through.)

But with Prudential dropping the AIA deal following concerns expressed by its shareholders, there is no hurry for AIG to exit the life insurance joint venture with Tata, say market players.

A Tata AIG spokesperson refused to comment on the issue, while AIG’s India representative Sunil Mehta could not be reached for comment.

“There is no reason why the Tatas should buy out AIG now. AIA will either relook at the price or look for another buyer. It is unlikely that the Tatas will initiate the purchase without any trigger of change in ownership,” said a consultant with Ernst & Young.

“The deal will go through sooner or later. The Tatas will wait and see how the transaction pans out before taking any decision,” said an investment banker. Experts say the Indian conglomerate may rope in another partner at a later stage.

Tata AIG Life Insurance was launched in 2001 and has over 300 branches in the country. It has a market share of around 1.5 per cent.