It is official now. UK-based Prudential Plc, which had earlier announced its decision to take over the Asian operations of financially-battered American International Group?s (AIG) Asian life operations, has now said that it would sell AIG?s 26% stake in Tata-AIG Life Insurance in India to the Tatas. An international agency has quoted Prudential CEO Tidjane Thiam saying the insurer plans to sell its stake in Tata AIG India joint venture to the Tatas, who own 74% in the life insurance JV.
Prudential had acquired AIG’s Asia business for $ 35.5 billion on March 1.
Earlier, the Tata Group had announced its plan to buy out the remaining stake in Tata-AIG from the latter. Now that Prudential is buying out AIG?s life insurance operations, Tatas have to do the same transaction with Prudential as the company has a tie-up with ICICI for insurance business in India.
Industry sources point out that since Prudential already has a life insurance joint venture with the country?s second-largest bank, ICICI Bank, it doesn?t need another player for Indian operations. Similarly, Tatas (with 74% in Tata-AIG Life) , who were not expecting such a sudden break up in partnership with AIG, which was caused by the mammoth losses due to global financial crisis, will either choose to go alone or may rope in a foreign partner afterwards.
However, the Tatas have no intention to exit life insurance business and seems to be well-prepared to manage the situation where AIG?s exit from Tata-AIG Life is certain.
FE on September 18 had reported that Tatas had appointed consultancy consulting & audit firm KPMG to undertake the valuation of AIG?s 26% in Indian life insurance joint venture.
Insurance Regulatory & Development Authority (Irda), the insurance regulator in India, doesn?t permit a single foreign partner to have more than one domestic partner in one segment. This norm also effectively wouldn?t allow Prudential to have both Tata and ICICI Bank as insurance partners in the country.
According to analysts, AIG?s 26 %t stake in Tata-AIG Life, which has an assets of Rs 7,000 crore, could fetch up to Rs 300 crore for Prudential.
Launched in 2001, Mumbai-headquartered Tata-AIG Life has built a substantial life insurance operation in the country and with 300 branch, has a market share of around 1.5%.
