Mahindra & Mahindra and Manulife have entered into an agreement to establish a 50:50 life insurance joint venture, subject to regulatory approval. The total capital commitment from each shareholder is up to Rs 3,600 crores ($400 million approximately). Each shareholder is expected to invest Rs 1,250 crores ($140 million) in the first 5 years.
According to M&M’ regulatory filing, this new venture will “strengthen Mahindra and Manulife’s existing footprint in India and underscores their commitment to enhancing the financial wellbeing of customers in one of the world’s fastest-growing markets.”
Mahindra-Manulife JV- What next
Following the signing, Mahindra and Manulife teams will work together to apply for an insurance license. Kotak Investment Banking acted as financial adviser and AZB & Partners acted as legal counsel to Mahindra Group. Debevoise & Plimpton acted as legal counsel to Manulife.
The vision for the JV is to be the top life insurance company for rural and semi-urban India, and in serving urban customers through leadership in protection solutions, the company’s statement claimed. The joint venture aims to offer long-term savings and protection solutions tailored to the diverse and growing needs of India’s population, in line with India’s “Insurance for All” vision by 2047.
Upon regulatory approval, this joint venture will expand on the collaboration between Mahindra and Manulife in India, following the successful launch of Mahindra Manulife Investment Management in 2020.
Growth opportunity in Indian market underpinned by strong megatrends
The life Insurance market, in India, has surpassed $20 billion in new business premiums, growing at a 12% CAGR over the past five years. Yet, India continues to have a high protection gap and low insurance penetration, providing significant long-term growth potential.
This growth is underpinned by robust GDP expansion, a rising middle class, and a supportive regulatory environment. Speaking on the partnership with Manulife in this backdrop, Dr Anish Shah, Group CEO & Managing Director, Mahindra Group said, “ With a focus on leveraging technology the joint venture will build an efficient, customer-centric insurer in India. We are confident that this joint venture offers a very compelling opportunity to create meaningful value for our shareholders.”
Phil Witherington, President and CEO, Manulife added that, “We have a trusted partner in Mahindra Group, with whom we already have a successful asset management collaboration, and we see tremendous opportunity to build on our efforts by leveraging their deep distribution network alongside our industry-leading agency distribution and insurance expertise.”