Gic To Up Pie In Mf, Housing Finance Arms

General Insurance Corporation of India (GIC) intends to buy out the shareholding of the four state-owned general insurance companies in its group subsidiaries -- GIC Mutual Fund and GIC Housing Finance.

This is part of GIC's strategy to consolidate its position in the Indian scenario as it has been designated the national reinsurer. The company is, however, yet to take a view on its shareholding in the overseas ventures -- the Kenya-based KenIndia and the Singapore-based India International. GIC officials said: "No decision has yet been taken".

GIC and Life Insurance Corporation of India (LIC), together with a local partner in Kenya, are the promoters in KenIndia.

 

India International is jointly promoted by the four state general insurers -- The New India Assurance Company, The Oriental Insurance Company, United India Insurance Company and National Insurance Company -- and GIC, with each holding 20 per cent.

Incidentally, GIC has sent out feelers to hire consultants to help in its restructuring and expansion into foreign shores. The proposal to revamp GIC also follows the delinking of the four arms from the erstwhile holding company (GIC).

GIC has been talking of expanding its operations overseas and thereby gaining inward reinsurance business. It has been eyeing Afro-Asian countries, the Middle East and the Soviet block. "We are not looking at Europe or America because large companies are present there," said company officials. Even as GIC talks of overseas expansion, sources said the finance ministry is not in favour of the proposal.

"It make sense for GIC to have international branches only if it is allowed to take inward reinsurance business from abroad. Else there is no point (GIC) being there," said a foreign consultant.

GIC has sent out feelers to hire consultants to help in its restructuring programme and expansion into foreign shores. One leading foreign firm said: "GIC will derive better value by auctioning off the two arms".

This follows GIC alone not having much of a distribution model. And with the delinking, the offices of the four general insurance outfits would no longer support GIC should they sell off their holdings.

So far as the domestic subsidiaries are concerned, GIC is deliberating on its options to either become the sole shareholder or sell out its portfolio in the case of GIC Mutual Fund. GIC and the four arms hold 49.5 per cent stake in the asset management company, with Soros Capital Management having a 40 per cent share, and the balance 10.5 per cent with GIC Housing Finance.

GIC's shareholding in GIC Housing Finance would rise to around 32 per cent if it takes over the shareholding of the four subsidiaries, from the current 6.3 per cent, said industry sources. Besides GIC and the four general insurance companies, the other major shareholder is UTI with 9.6 per cent. Other financial institutions hold a combined five per cent stake, and the balance is with the public.