Aviva may exit Indian insurance biz

British insurer Aviva PLC may pull out its India life insurance joint venture with the Dabur Group. In the 74:26 joint venture, the foreign insurer holds the maximum permissible limit of 26% stake, 

which valued around Rs 3,040 crore. According to the sources,Aviva Life is in the process of moving away from less-profitable markets where it has struggled to expand its business. Aviva aims to cut its costs by Rs 3,700 crore by the end of the year. The insurer is in the process of hiring corporate advisors to find buyers for its stake in the joint venture.   Sources said that Aviva is considering over numerous options, including selling its stake to Dabur Group itself, if it fails to find a foreign buyer. If Aviva exits from Indian insurance market, it would be the 3^rd foreign insurer to quit India since 2012, obstructed by regulations that restrict foreign ownership and fierce political opposition to changing those limits. Dabur Group owns Ayurvedic medicine and food products manufacturer Dabur India.

 “We don't comment on market speculations or rumours as a policy,” said Aviva PLC in a statement. Sri Mohit Burman, a director of Aviva Life who represents Dabur Group, was not available for comment.

Aviva had identified India and China as potential and ‘must win’ markets, but the decision to sell out its Indian insurance business indicates a change in that policy. Aviva hired former AIA Group chief executive Mark Wilson last year to lead a turnaround in its business, hit by slower growth in its main market of Europe. Wilson joined after spiralling costs and poor share price performance triggered an investor revolt in 2012 that forced out then-CEO Andrew Moss.

This year, Aviva pulled out of its Malaysian insurance joint venture and exited from Russia.
The insurer witnessed a 4.1% drop in new business premiums for the period April-May, as compared to the same period last year. It saw a 7.8% drop in new premium collection to Rs 2,960 crore in this period.

Source: http://www.insuringindia.com/