SBI, IAG launch insurance joint venture

The State Bank if India (SBI) and Insurance Australia Group (IAG) have entered into a joint venture agreement for setting up a general insurance company in India. The company will commence operations in 2009.

The new entity would be held 74 per cent by SBI and 26 per cent by IAG;  however, IAG said it has the option to increase its stake to 49 per cent in the future.
IAG chief executive Michael Wilkins expects the general insurance market in India, with its large and expanding economy, to grow 15 to 20 per cent per annum over the next ten years. IAG, he said will invest Rs542 crore in the joint venture. This will be financed through internal sources.

According to Wilkins, the joint venture marks a significant step in IAG's strategy to leverage select international general insurance opportunities. He added that gaining entry to the Indian general insurance market has been a priority with IAG for some time, in view of support for the company's long term growth and profitability.

The joint venture, chairman O P Bhatt said, is part of SBI's strategic initiatives to enable it to retain its pre-eminent position as a financial service group in the country. He added that its unique brand equity and extensive distribution network will enable SBI to provide protection to people in the remotest parts of the country. He said that the venture would emerge as a leader on the lines of its life insurance venture SBI Life in a very short time.

Last week, SBI said it has received RBI approval for a proposed joint venture with a unit of French bank Societe Generale for offering custodial and related services in the country. SBI would hold a 65 per cent stake in the proposed venture with Societe Generale Securities Services holding the rest.