Re­liance Nip­pon Life Scouts for New Part­ner

The Economic Times - - Finance & Commodities -

Sea­son of con­sol­i­da­tion & stake raises in cover cos

Mum­bai: RelianceNip­ponLife,whichisa­tadis­ad­van­tage­due­tothe ab­sence of a joint ven­ture with a bank, looks to merge the com­pany with a com­peti­tor which has a dis­tri­bu­tion net­work, says Sam Ghosh, group CEO of Re­liance Cap­i­tal. The likely can­di­date for part­ner­ship may be an in­surer in which a bank owns a dom­i­nant stake and has a strong branch pres­ence.

“We are look­ing to merge our com­pany with an­other in­surer that has strong dis­tri­bu­tion net­work,” said Sam Ghosh. “This could be by ei­ther merg­ing with an­other big com­pany or ac­quir­ing a small bank-led com­pany.”

Talks of con­sol­i­da­tion among many ex­ist­ing play­ers have started af­ter the HDFC Life and Max Life merger an­nounce­ment.LIC­con­tin­uesto­bethe­do­m­i­nant­player with over 50% mar­ket share in insurance, which is a highly com­pet­i­tive in­dus­try. While ICICI Pru­den­tial has listed its shares on the stock ex­changes, SBI Life plans to list in the com­ing fi­nan­cial year.

The com­pany had a mar­ginal profit in the quar­ter ended De­cem­ber 31, 2016. The com­pany’s dis­tri­bu­tion net­work in­cludes over 770 of­fices and ap­prox­i­mately 79,800 ac­tive ad­vi­sors.

The life insurance com­pany’s new busi­ness pre­mium fell 25% to ₹ 215 crore from ₹ 286 crore in the cor­re­spond­ing quar­ter of the pre­vi­ous year. Japan’s Nip­pon Life In­surance­has­raised­itsstakeinRelianceLifeIn­surance toupto49%in­March2016,ataval­u­a­tionof ₹ 10,000 crore. The deal has fetched Re­liance Cap­i­tal, the hold­ing com­pany of Re­liance Life, ₹ 2,265 crore for 23% alone.

Re­liance Life Insurance has been in dis­cus­sions with banks––pri­vate­sec­tor,pub­lic,for­eign­banksan­dre­gional ru­ral banks –– to ex­pand its dis­tri­bu­tion chan­nel. It wants to im­prove the prof­itabil­ity and re­gain mar­ket share in the pri­vate sec­tor with a bank as its part­ner.

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