Insurance firm AIA Group on Monday announced that it will increase its shareholding in Tata AIA Life Insurance Company to 49% from 26% for an undisclosed amount, joining the list of a number of foreign insurance companies who are increasing their exposure to India since the government has hiked the foreign direct investment limit in the insurance sector to 49%.
Tata AIA Life Insurance Company is a joint venture of Tata Sons and AIA Group. Tata AIA Life Insurance Company was given licence on February 12, 2001 to operate in India and started operations on April 1 of the same year. For the financial year ended March 2015, the company recorded total premiums of Rs 2,122 crore and a profit after tax of Rs 264 crore.
A senior industry official said, “If we look at the last few days, several of the foreign partners have hiked their stake in Indian insurance business as they have all the clarity of ‘management control’. I think this is a positive step as many insurance companies can expand their business and reach by selling their stake to their foreign partner.”
The Insurance Laws (Amendment) Act, passed in February 2015, allows foreign partners to increase their stake in Indian insurance firms to 49% from 26%. A number of foreign promoters have started increasing their holding in the insurance joint ventures after regulator Insurance Regulatory and Development Authority of India (Irdai) clarified the issue of ‘management control’.
Last week, Sun Life Financial increased its stake in Birla Sun Life Insurance from 26% to 49% at an investment of Rs 1,664 crore. On December 1, French insurer AXA hiked its stake in life and general insurance joint ventures with Bharti Enterprises from 26% to 49% for an undisclosed amount. In November, Nippon Life bought a 23% stake in Reliance Life Insurance, pushing its holding in the company up to 49%.
Standard Life had in August 2015 announced plans to buy 9% additional stake in its Indian insurance venture HDFC Life to raise its ownership to 35%, valuing HDFC Life at R18,951.4 crore. In the same month, the FIPB approved Tokio Marine’s plan to raise stake in its Indian JV partner Edelweiss Tokio Life Insurance to 49% from 26%. British insurer Aviva also announced its plan to raise stake in its Indian joint venture with Dabur Invest to 49%.
In another development, Aegon Religare Life Insurance Company has been renamed as Aegon Life Insurance Company. A press release said, “We also confirm that Aegon NV has increased its stake in the company to 49%. In addition, Bennett, Coleman and Company of the Times Group will increase its stake by acquiring Religare Enterprises’ entire shareholding in the company.”