The joint venture company will be headed by an expatriate nominee from Sun Life. Subject to Insurance Regulatory & Development Authority (IRDA) clearance, the board of the new company will consist of two representatives each from the Birlas and Sun Life.

Chairman and CEO of Sun Life Donald Stewart told The Financial Express that, "Out of Rs 300 crore earmarked for investment in India, around Rs 150 crore has already been pumped into the three existing ventures with the Birlas. We expect to break even in 5-7 years."

The insurance venture is expected to begin operations within the next 12 months. The partners will keep the equity base of the company at the minimum level of Rs 100 crore, which will be enlarged over time.

Stewart said the company proposes to launch pension and health products along with life insuranceoperation as well. Considering that we have a range of financial services products, the company is likely to go for packaging them with various insurance schemes, subject to IRDA clearance. "We will have both corporate and individual clients and will devise a special strategy for tapping the rural sector," he added.

Stewart was categorical that the focus will be on value-added products and services, including both traditional as well as new range of products, but will not underprice products to get a bigger share of the market.

Speaking on reduction in premiums, Stewart indicated that it was possible to do launch a range of economical products without compromising on the value proposition.

The company, apart from availing the group distribution network-the two have a joint venture in retail distribution, too-will also rope in the facilities provided by other financial intermediaries.

The Birlas have an extensive retail reach with 14 branches countrywide and between 70-80 marketing agencies.

Stewartsaid the company will give equal importance to technology as well as developing an large agency force. Between 10-20 per cent of the total investment will be in technology initiatives.

Vijay Singh, head of Sun Life's India operations, said: "In the next few years, we will have a large enough agent force, but the number cannot be quantified at this time."

"The rural sector presents a huge market and one has to devise an affordable strategy to reach and service the customers. Initially, the focus will be on the top three income groups," he added.

Consultant okays Birlas banking foray

Sun Life Assurance of Canada is open to the idea of partnering the Birlas if they choose to venture into retail banking. This follows the recommendation of an independent consultant appointed by the Aditya Birla group which has recommended that the diversified business house go ahead with the proposed banking foray, if eventually allowed by the Reserve Bank.

Donald Stewart, chairman and CEO of Sun Life, told TheFinancial Express: "We have a fruitful partnership with the Birlas running into four separate joint ventures. We will always look into expanding the relationship beyond its present scope."

Stewart added that the Canadian major has a presence in banking in the United Kingdom.

SK Mitra, director, group financial services, of the Aditya Birla group said: "We are looking at the possibility of getting into retail banking if the central bank allows us to. It entirely depends on what policy framework is put in place."

Sun Life and the Birlas already have three existing joint ventures in mutual funds, stock broking and retail distribution, while a fourth in insurance is expected to kick off operations in another 12 months.

Earlier the group, along with some other corporate houses, had made an application with the RBI, but the central bank has not issued any fresh license for the last five years. An internal committee at RBI has advocated against allowing issue of fresh licenses for the time being.

As perthe existing guidelines, the Birlas will have to make an investment of Rs 100 crore in the equity of the banking arm, either alone or along with a partner, which has to be diluted to 40 per cent in three years.