Japan’s largest life insurer Nippon Life Insurance Company is in talks to pick up a 26 per cent stake in Reliance Life Insurance Company of the Anil D. Ambani group.
Nippon Life will reportedly pay close to 60 billion yen ($723 million) for the stake in Reliance Life, the arm of Reliance Capital Ltd, according to a report in Japan’s Asahi newspaper.
So far, the group has made a capital infusion of around Rs 3,100 crore in Reliance Life.
However, a spokesperson for Reliance Capital declined to confirm reports that its insurance arm was in talks with Nippon Life.
The entry of Nippon is expected to benefit Reliance Life as it will not only be able to gain access to more capital but also tap into the skills of the Japanese insurer. On the other hand, the latter will gain an entry into India where a huge potential for insurance business is seen despite it having low penetration currently.
At present, there are 23 life insurers who have set up operations in India. A significant number of these players (21) have tie-ups with foreign partners.
Reliance Life has an 8 per cent market share in the private sector when it comes to new business premium. It has more than 1,200 branches and over 200,000 agents. As on December 31, 2010, its total funds under management stood at Rs 17,355 crore. For the third quarter, the company’s total premium was placed at Rs 1,447 crore, of which renewal premium stood at Rs 857 crore.
The insurer had earlier said it could engage a foreign partner ahead of its proposed initial public offering.
Senior officials had then indicated that if the partner picked up the entire 26 per cent, the float may be postponed.
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