The new venture, Tata-AIG Risk Management Company, will absorb the activities currently carried out under Tata Risk Management (TRM), a Tata Sons division. TRM has around 16-17 staffers headed by a general manager.

Though preparations for the 50:50 joint venture had begun quite some time back, both the Tatas and AIG were waiting for an opportune time to sign the agreement, said industry sources. "The budgetary announcement, allowing private sector entry into the insurance business, has helped both the companies finalise the deal," they said.

The new joint venture is complementary to an earlier memorandum of understanding the Tatas had entered into with AIG, a company with more than $148 billion in assets, for undertaking general insurance business in the country if it isopened up.

AIG, which is already represented in India with a small staff strength, currently takes active interest in investing in domestic infrastructure projects and newly-emerging companies. The company's chief executive, Jon H Chambreau, is, however, being shifted out of India. His replacement is yet to be announced.

According to sources, the finalisation of the Tata-AIG joint venture agreement indicates that even if the government does not allow a minority stake for foreign partners in insurance ventures, the Tatas will be prepared to start business on their own with technical support from AIG.

The scope of Tata-AIG's services includes safety audit, hazard and operability studies, risk assessment/analysis, emergency/disaster managment plans, environmental audits, hazardous waste management and insurance planning.

With the formation of the new company, the Tatas have created one of the first private sector risk management companies after the budgetary announcement to allow private sector entryinto insurance.

Earlier, the Chennai-based Cholamandalam Finance announced a foray into risk management through a tie-up with the UK-based Royal Sun Alliance. Another domestic company, Bombay Dyeing, which has signed an MoU with the UK-based General Accident, is also expected to join the fray.

According to analysts, the country's risk management business is valued at almost Rs 30,000 crore annually. "Fees from assessing the risks of major projects will provide a huge income source for risk-management companies," they said.