Thursday, January 23, 2014

Aviva to hire Deutsche Bank, JP Morgan to divest from India insurance biz

UK-based insurer Aviva Life Insurance has hired Deutsche Bank and JP Morgan to sell its stake in the Indian insurance joint venture Aviva Life Insurance (ALI) Company. Its stake will be sold either to another global insurer or to the Burmans.

According to the sources close to the development, the company is valued at Rs 1,100 cr. The Indian insurance sector has been limping due to slow growth, IRDA's restrictions and the capital-intensive nature of the sector. Aviva Life has performed poorly, and has slipped to 13th in the rankings table with its total premium income falling 11% in the last fiscal year to Rs 2,140 cr.

Out of 24 private life insurance companies in India, 7 are still loss making. In fiscal year 2012-13, Aviva Life registered a profit of Rs 32 crore. The Insurance Regulatory and Development Authority (IRDA) has imposed product design, capping expenses and increasing policy tenor, which has reduced margins in life insurance business. Policy sales have slowed down over the past few years.

Since the sector was opened for private and foreign companies in year 2000, two international insurers ING and New York Life have exited life insurance joint ventures in India.

ALI is a joint venture between Dabur Group, one of India's oldest business houses and Aviva Group. Aviva holds 26% stake, the maximum permissible limit; while the Dabur group holds the rest 74% stake in the joint venture.

No comments:

Post a Comment

So, what do you think?