BoB, Andhra Bank, UK firm in life JV

Bank of Baroda, Andhra Bank and Legal and General Group of UK have signed the shareholder's agreement for a joint venture to launch life insurance operations. The MoU for the joint venture was signed on 16th November 2007.

BoB, Andhra Bank and Legal and General will hold 44 per cent, 30 per cent and 26 per cent respectively in the life insurance venture named Baroda Legal & General Life Insurance Co. The company is likely to launch operations between January and March 2009, subject to regulatory approvals, at an initial capital of Rs 200 crore.

"We are aiming to be among the top 3 life insurance players in the country in 5 to 7 years," said AK Khandelwal, CMD of Bank of Baroda at a press conference.

Khandelwal added that the company will be a pure bancassurance driven company and will not hire agents. The two banks have 4000 branches and 45 million customers.

BoB has a bancassurance tie-up with HDFC Standard Life Insurance, while Andhra Bank has tied up with LIC. Both these will end once the proposed company begins operations in 2009, said Khandelwal.

The shareholders agreement was signed by AK Khandelwal, CMD of Bank of Baroda, DK Ramakrishnan, CMD of Andhra Bank and Rob Margetts, chairman of Legal and General.

"The life insurance company will offer value-for-money products. The JV team is studying the market needs. We will offer savings products, Ulips and term products initially," said Margetts.

"We will employ 1000 people in India in the next 12 months, and provide the necessary acturial, operational and technical skills", added Margetts.

"We have grown organically in the UK and increased our market share from 3 per cent to 11 per cent this year. In the protection and risk business, we have grown from 23 per cent. We have become the market leader in Egypt in just a span of 4 years and will be a top player in India too," said Margetts.

Legal and General has funds under management amounting to $550 billion. It is a leading UK risk, wealth and investment company with a market capitalisation of $15 billion.