Approval and New MoU's
Jan 11, 2001

Author: PersonalFN Content & Research Team

The sector which until recently had seen more broken MoUs than the number of licenses issued till date, is suddenly springing back with new MoUs and new approval. OM Kotak Mahindra Life Insurance Company, the joint venture between Old Mutual Plc. and Kotak Mahindra Finance had yesterday received the certificate from the IRDA to conduct life insurance business in India.

The company will have an initial paid up capital of Rs.150 crores and will be head quartered in Mumbai and hopes to start issuing policies in a few weeks from now. According to its deputy chairman Mr.Hasan Askari, the company is well advanced in planning for the launch of its products in the market place and the team is very much excited by the opportunities and challenges in this sector.

The partners in the venture had entered into the joint venture agreement in Aug 2000 . The Indian partner Kotak Mahindra group has an extensive branch network across India with over five lakh retail customers. Old Mutual Plc. the UK based partner in the venture is the largest Life insurer in South Africa with a market share of over 30 per cent and also has a large general insurance, asset management and banking business.

In another related development, CGNU of the UK and Dabur have signed a memorandum of understanding to enter the life insurance business. Earlier CGNU had snapped ties with the Hindustan Times group and the Dabur's had cancelled its MoU with All State Insurance of the US.

In this new venture, a marriage of two divorcees, CGNU will hold 26 percent, while the Burman family, promoters of the Dabur group will hold the remaining 74 per cent and the new company will be called Dabur CGNU Life Insurance Company. They expect to start the new business by the middle of this year subject to approval from the IRDA. The flagship company of the Burman's, Dabur India is not directly in this venture, but the other companies in the group are investing.

While Dabur will utilise CGNU's expertise in insurance, actuaries and under-writing, the later will use the vast distribution network of Dabur, to distribute its products. CGNU is the largest insurance group in the UK and is rated among the top five insurance groups in Europe. It has also been included in the list of possible bidders in the troubled UK mutual life group Equitable Life.

The few other recent tie-ups are Zurich Life, which had broken off with Bank of India, is now in alliance with Punjab National Bank and the Hero group. The Dutch, ING group with Vysya Bank and the Damani group and Met Life of the US with J&K bank and other small investors.