Post the $35.5-billion deal between UK-based Prudential and America International Group (AIG)?where former would buy out the latter?s Asian life insurance arm?Tata Group is planning to revamp its insurance operations in India. The group is having two joint ventures in the country with AIG partnership.
Both Tata Group and AIG have floated two joint ventures?Tata AIG Life Insurance and Tata AIG General Insurance, where the Indian conglomerate holds 74% each.
Industry sources point out that though it is not clear what are the exact plans of Tata group over the AIG?s 26% stake, it is now clear that Insurance Regulatory & Development Authority (Irda) will insist that Tatas either buy out AIG?s stake or find a new foreign partner.
Irda regulations don?t permit either foreign players or domestic players to have two partners for undertaking operations in the same segment of insurance industry.
Prudential already has a life insurance joint venture in India with ICICI Bank.
Speaking to FE, J Harinarayan, chairman, IRDA said that the insurance regulator is yet to receive details about the latest Prudential- AIG deal ?Prudential will either have to sell its stake in ICICI Bank or part with the stakes in Tata group after acquiring AIG?s Asian life insurance operations which has 26% stake in Tata AIG life insurance company,?? he said.
Industry sources, however, point out that Tata group may be buying out AIG?s 26% stake and afterward offload for another foreign partner with a healthy premium.
A number of foreign players like Germany based Ergo, French based Societe Generale are currently looking for an Indian partner for life insurance business.
After exiting from its IT outsourcing outfit, financially battered AIG was gearing up to sell its 26 % stake in Tata AIG Life Insurance to its Indian partner. Tata, which holds 74% in the life insurance joint venture, has roped in consulting and auditing firm KPMG to structure the deal. However, AIG will keep its stake in in another joint venture?Tata AIG General Insurance. Launched in 2001, Mumbai-based Tata AIG Life has built a substantial life insurance operation in India and has some 200 offices across the country and assets of around Rs 10,000 crore.