Aditya Birla Group to enter health insurance business

India's Aditya Birla Group (ABG) has decided to venture into the health insurance sector, joining hands with South African MMI Holdings Ltd.

According to a statement issued by the group's financial services arm, Aditya Birla Financial Services Group (ABFSG), a Memorandum of Understanding (MoU) has been signed with MMI Holdings to venture into the health insurance market.

The Indian and the South African groups would enter into a formal joint venture agreement. The Indian group would hold 74 percent stake in the proposed venture while the South African company would hold 26 percent.

The transaction is subject to the execution of the respective legal agreements and obtaining the required regulatory approvals.

The MMI in a statement said the transaction will enable the partners to leverage Aditya Birla group's strong market presence in India and MMI's established capabilities in health and wellness.

"MMI considers India as an important strategic market for its international expansion strategy. ABG is a household name in India and a respected and trusted business group and we are extremely pleased to enter into a partnership with them. MMI believes health insurance is a very attractive entry point into India," Nicolaas Kruger, group CEO of MMI, was quoted as saying in the statement.

"Health Insurance has low penetration levels in India. Given ABFSG's focus on building a retail presence across products, we foresee a huge potential to target the requirements of untapped customers and their families. Our partnership will give us the competitive edge given MMI's expertise in the health insurance sector," Ajay Srinivasan, chief executive, financial services, Aditya Birla Group, was quoted as saying in the statement.

This is the second insurance venture for the ABG. The company is the promoter of the Birla Sun Life Insurance Company Ltd.