Nippon to raise stake in Reliance Life post FDI hike

With an aim to deepen its partnership, Japanese giant Nippon Life is in talks to increase its stake in India's leading private insurer Reliance Life, as soon as the government allows higher FDI in the sector.

 

Nippon Life currently holds 26% stake in Reliance Life Insurance Company, which it had bought for Rs 3,062 crore. This deal was completed in October 2011 and it had valued the Indian insurer at over Rs 11,500 crore at that time.

 

The Indian government has now proposed to hike FDI cap in insurance sector from 26% to 49%. The proposal was cleared by the Union Cabinet in July this year and the government has said it is hopeful of its passage in the Parliament.

 

Reliance Life, which is part of Anil Ambani-led business conglomerate Reliance Group's financial services arm Reliance Capital, has expanded its partnership with Nippon Life even further and it has also adopted certain business models of Japanese insurance giant in its practices here.

 

Nikkei business daily quoted Reliance Group Managing Director Amitabh Jhunjhunwala as saying that "the two sides (Nippon Life and Reliance Life) are in talks and will likely seal the deal (for hike in stake) as soon as the legislation raising caps on foreign investment in Indian insurers passes".

 

Jhunjhunwala, who was here for a new partnership between Nippon Life and Reliance Capital Asset Management, further said that the Reliance Group "welcomes additional investment by Nippon Life".

 

At a time when Prime Minister Narendra Modi is on his first official visit to Japan and has sought greater investments into India, Nippon Life has launched two India-focussed funds to facilitate direct investments by Japanese retail investors into Indian markets.

 

Besides, Nippon Life has also reiterated its commitment to partner the Indian group in its proposed 'Reliance Bank' venture as and when a banking license is granted by RBI.

 

Reliance Life Insurance (RLI) is amongst the leading private sector life insurance companies in terms of new business premium with a market share of 10% of the private sector life insurance industry.

 

Its new business premium was Rs 554 crore for the quarter ended June 30, 2014, while renewal premium was Rs 419 crore.

 

The company recorded a profit of Rs 34 crore for the quarter ended June 30, 2014.

 

Further, surplus arising from non-participating business was at Rs 21 crore. The total funds under management as on June 30, 2014 stood at Rs 19,116 crore, while its distribution network stood at over 900 offices as on June 30, 2014.