IL&FS taps Aegon for insurance foray

Ujjal K Basu Roy

Mumbai, Aug 21: THE Infrastructure Leasing and Financial Services (IL&FS) is contemplating an entry into the insurance sector, and is in talks with the UK-based Aegon for the same. The company is expected to enter the life insurance segment only if it goes ahead with its plans of foraying into the insurance sector.

The plan is still at the feasibility study stage. It is learnt that IL&FS top brass has had quite a few meetings and discussions with officials from Aegon. The company has plans of entering the pension funds segment also.

Recently, IL&FS recruited a number of B-school graduates as part of their summer internship. Some of these students were asked to do projects on various aspects of the insurance market. The projects that were done looked into customer valuation and branding, advertising, bancassurance and other aspects. In all probability, IL&FS will hawk insurance products through the bancassurance route, but it has not yet decided on the choice of the bank.

Said a top official of IL&FS: "We have been toying with the idea of entering the insurance business. We have had some discussions also, but nothing has been finalised. We are talking to a number of people. We have not decided on whether we will enter the life or the non-life insurance business or both."

IL&FS was in the news recently about its move to rationalise operations and cost structure in two of its subsidiaries, Investmart India and Orix Auto Finance. About 100 employees of both the companies have been asked to leave by end of August.

Aegon is one of the world’s largest listed insurance groups, ranked by market capitalization, assets and net income. Close to 90 per cent of the group’s existing business is in life insurance, pensions and related savings and investment products.

The group is also active in accident and health insurance, general insurance and limited banking activities with over 24,000 employees worldwide. Aegon’s major operations span the United States, Netherlands, the United Kingdom, Hungary and Spain.The insurance, pension and investment businesses off the group are local, rather than global in nature since crucial differences in distribution, tax and legal systems exist in each geographic market.

Aegon’s development is largely implemented by its national operating groups. Autonomous growth by the specialised business units is supplemented by low-risk ‘add-on’ acquisitions to add scale and dimension.

Crucial differences exist in local markets and for this reason, Aegon emphasises local management and expertise. Operating companies have the freedom to market unique products, develop their own distribution and customer service and take key decisions at a local level.