Reliance Nippon Life Scouts for New Partner
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.