IDBI Bank, Federal Bank and Fortis have agreed a joint venture life insurance company in India. It will offer a full range of life insurance and long-term savings products to the Indian market.
Under the Agreement, IDBI Bank will own 48% of the equity, while Fortis Insurance International and Federal Bank will each own 26%, which is the maximum allowable shareholding for a foreign insurer under India’s Foreign Direct Investments regulations.
The Joint Venture Agreement follows the signing of a Memorandum of Understanding on 11 July 2006.
Subject to regulatory approval, the three partners expect the new company to be operational by mid-2007. It will promote a full range of life insurance and long-term savings products, including traditional and unit-linked savings plans, and health and disability cover. These will be available on an individual and group basis. The joint venture will build a multi-channel distribution platform including banc assurance, agency and direct sales.
“We are very excited about this partnership and about the fact that this creates the opportunity to work together with two highly successful banks in India,” says Peer van Harten, CEO of Fortis Insurance. “Fortis has had a long-standing record of successful banc assurance partnerships in Asia, as we have established leadership positions with our Asian joint ventures. Gaining entry to the Indian life market is fully in line with our strategy to build a significant presence in Asia, especially in a market that has such huge potential. I believe the three partners’ expertise and distribution capabilities combined with the high level of joint ambition and professionalism represents a winning proposition for all parties involved. Fortis looks forward to working with its new partners in India.”
Shri V.P. Shetty, Chairman and Managing Director of IDBI says the bank sees life insurance as a high-growth business in India. “We are excited about creating value for customers by leveraging our brand value, capital strength and the track record of innovation in retail banking,” he says. “The IDBI name stands for trust and solidity and we are confident that the insurance products offered by the joint venture will gain customer acceptance and confidence. The global expertise of Fortis and the substantial regional franchise of Federal Bank add great strength to the partnership and we are very pleased to have been able to build a fruitful relationship with them.”
Sri M. Venugopalan, Chairman of Federal Bank, describes the deal as a “landmark event in our efforts to diversify into complementary areas. The new vehicle will be able to leverage the product and distribution capability that the three partners bring to the table. We at Federal Bank look forward to working with Fortis and Industrial Development Bank of India to enhance our presence in the financial space through this new vehicle and the new products that we will offer to our existing and prospective customers.”