IAG confirms joint venture with Indian banking giant
IAG today confirmed it has sealed its $170 million joint venture with the State Bank of India (SBI) and may extend its stake to 49% of the business.
The No 1 Australian insurer will take an initial 26% stake in the general insurance venture that is expected to begin trading next year.
But as reported by insurance.com.au earlier this month, IAG will be allowed to increase its stake from 26% up to 49% after Indian cabinet ministers agreed to relax rules governing foreign direct investment.
IAG announced in May that SBI had selected the Australian insurer as its preferred joint venture partner.
The general insurance business will have access to the Indian banking giant’s 100 million customers and 11,000 branches, as well as an associate bank network.
Under the agreement, IAG will have “board representation, the right to appoint certain key management personnel and affirmative voting rights over key business matters”.
IAG CEO Michael Wilkins says the venture is a key plank in the insurer’s “select” international growth ambitions.
“Entering the Indian general insurance market has been a priority for IAG for some time,” he said. “India has a large and expanding economy, with a general insurance market predicted to grow 15-20% per annum over the next ten years.”
SBI Chairman OP Bhatt expects both parties to benefit from increasing insurance penetration rates.
“SBI with its unparalleled brand equity and extensive distribution network will be able to provide protection to people even in the remote rural and semi-urban areas throughout the country.”
The No 1 Australian insurer will take an initial 26% stake in the general insurance venture that is expected to begin trading next year.
But as reported by insurance.com.au earlier this month, IAG will be allowed to increase its stake from 26% up to 49% after Indian cabinet ministers agreed to relax rules governing foreign direct investment.
IAG announced in May that SBI had selected the Australian insurer as its preferred joint venture partner.
The general insurance business will have access to the Indian banking giant’s 100 million customers and 11,000 branches, as well as an associate bank network.
Under the agreement, IAG will have “board representation, the right to appoint certain key management personnel and affirmative voting rights over key business matters”.
IAG CEO Michael Wilkins says the venture is a key plank in the insurer’s “select” international growth ambitions.
“Entering the Indian general insurance market has been a priority for IAG for some time,” he said. “India has a large and expanding economy, with a general insurance market predicted to grow 15-20% per annum over the next ten years.”
SBI Chairman OP Bhatt expects both parties to benefit from increasing insurance penetration rates.
“SBI with its unparalleled brand equity and extensive distribution network will be able to provide protection to people even in the remote rural and semi-urban areas throughout the country.”