Not the first casualty of privatisation

AMP Sanmar Life Insurance Company is not the first casualty of privatisation of the Indian insurance industry. Looking back just before the first licence was issued to new players, a host of joint ventures fell by the bay.

A number of global insurance players made beelines to set up operations in the country. General Accident, Commercial Union, Eagle Star, Royal and Sun Alliance were all separate entities...Separate until Eagle Star was bought over by Zurich, which subsequently went burst.

Commercial Union and General Accident merged to form a single entity "" CGU. When CGU merged with the UK-based Norwich, it decided against venturing into the non-life segment. Meanwhile Royal and SunAlliance merged to form another single entity "" RSA.
 

Life stakes
Venture	Indian partner	Other allies
Bajaj Allianz	Bajaj Group	Allianz
ING Vysya	GMR Group	Gujarat Ambuja; Enam; ING
AMP Sanmar Life	Sanmar Group	AMP Life
SBI Life	SBI	Cardif
Tata AIG Life	Tata	AIG
HDFC Standard Life	HDFC	Standard Life
ICICI Prudential Life	ICICI Bank	Prudential Plc
Birla SunLife	Indian Rayon	SunLife
Aviva	Dabur	Aviva
Kotak Old Mutual	Kotak Mahindra Bk	Old Mutual Plc
Max New York Life	Max India	New York Life
MetLife	J&K Bank	M Pallonji & Co; Metlife, 3 pvt equity investors
Sahara Life	Sahara Group	""
*In the above list the first shareholder is the Indian partner

So what did this mean for India? A lot! Prior to the global consolidation these companies had gone in for local tie ups. Royal had signed up with DCM and SunAlliance with Cholamandalam.

When the merger between Royal and SunAlliance took place, SunAlliance ditched Cholamandalam and Royal ditched DCM. Guardian Royal subsequently signed up with Cholamandalam.

However, the global entity was soon bought over by Axa, which has yet to indicate its plans to set up operations in the country.

Similarly, General Accident had tied up with Bombay Dyeing and Commercial Union with Hindustan Times. Post merger, both global insurers ditched their local partners.

CGU then tied up with Dabur. Incidentally before the understanding between Dabur and CGU, the Indian entity was the second to apply for a licence together with its previous partner Allstate Life Insurance, whose global plans later did not feature India.

Indeed it would have been a regulator's nightmare had the sector actually opened up when Chidambaram was the then finance minister. Perhaps it is fortunate that the opening up was delayed to December 2000.

Nevertheless, AMP Sanmar's current condition and ING Vysya Bank's decision to exit the life insurance business are perhaps just the start of more to come.