SBI appoints E&Y for its general insurance foray

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Mumbai, Nov 16: The country’s largest commercial bank, State Bank of India (SBI), has roped in Ernst & Young (E&Y) to chart out its plan to enter the general insurance business along with a foreign partner. The bank’s mandate for E&Y is to find a suitable foreign partner for a 26% stake and also sort out other financial details for the proposed general insurance joint venture.

The bank, which already has a profitable life insurance operation with French major Cardif, has also put in place an internal technical team headed by another expert to sort out details of the proposed general insurance business in terms of products and professionals. Eminent general insurance professional GV Rao, former chairman of Oriental Insurance Company, heads the internal technical team. The bank is planning to finalise its joint venture plans in the next six months.

Sources say the bank is in a position to command a premium from day one from the foreign partner as it has a huge platform in terms of an existing customer base—both in terms of individuals and corporate business—a huge branch network and, above all, an international brand name.

Following the proposed merger of its seven associates, SBI will provide a mammoth platform for the proposed general insurance operation as large distribution channels hold the key to the insurance business.

The banking behemoth, which has plans to add several new activities to its existing set of operations in the near future, is readying to set up a pension fund business and a general insurance business on a priority basis.

In a new trend after venturing into life insurance operations, public sector banks are now entering general insurance—something considered more complicated than life insurance.

While Allahabad Bank, along with Japanese major Sampo, has received the license for its general insurance business, Bank of Maharashtra is partnering Sriram Finance and South African company Sanlam and preparing to apply for a license for the business.