Sun Life may raise stake in insurance joint venture Birla Sun Life
Birla Sun Life had lost market share since 2010 after the Insurance Regulatory and Development Authority (Irda) changed regulations.
"They can increase their shareholding in our insurance venture to the permissible limit of 49% and (they) have indicated that they wanted to do it," said Aditya Birla Group chairman Kumar Mangalam Birla. "That was the agreement we had when we started the joint venture in 2000." Aditya Birla Nuvo (ABNL), which acts as an incubator for the $40-billion group's new initiatives, owns 74% of the insurance venture.
"We are in the process of evaluating our options and have not taken a decision yet," said Sandeep Asthana, country head, India, Sun Life Financial. "India is a huge market with an immense potential and we are excited to be a part of the growth of the industry both in terms of increasing market penetration but, more importantly, also by evolving it in a way that it meets the needs of customers and helps Indian families to achieve lifetime financial security."
On Sunday, ABNL had said it would carve out its premium apparel maker and merge it with Pantaloon India Retail to create India's largest apparel chain with 1,869 exclusive stores.
"In our asset management business, we will own 51% and rest by Sun Life," Birla said in an interview after announcing the retail merger. He said the group has no plans to spin off any other business under Nuvo, and instead will invest more in financial services. "The bulk of Nuvo's investments, going forward, will be in financial services," he said, adding that he expects a payments bank licence from the Reserve Bank of India. "We also need capital to beef up our housing finance business."
Birla Sun Life had lost market share since 2010 after the Insurance Regulatory and Development Authority (Irda) changed regulations. The insurer saw this drop to 1.9% at the end of December 2014 from 3% in 2011 on the basis of annualised premium equivalent.
This is the sum of the regular anfinualised premium from new business and 10% of the first single premium in a given period. The company had reported new business income growth of 14% toRs 1,941 crore in the year-ended March from Rs 1,696 crore a year earlier. Profit after tax at Rs 240 crore in April-December 2014 was down from Rs 290 crore in the year earlier.
The company lost its bancassurance partner Citibank last year when the latter decided to partner with AIA as part of a regional deal.