Search the Internet           Tips

Tata-AIG file application for insurance ventures

The Tata Group and the American International Group Inc on Friday filed applications with the Insurance Regulatory Development Authority to set up two separate general and life insurance ventures with an initial capital base of Rs 1.25 billion each.

Tata Group chairman Ratan Tata told newspersons in New Delhi on Friday that the Tata Group will pick up 74 per cent stake in both the companies either through Tata Sons or through any of the group affiliates. AIG will hold 26 per cent stake in both the ventures. ''There will be some peripheral investment from the Tata Group's listed companies.''

The companies have been christened Tata AIG General Insurance Company Limited and Tata AIG Life Insurance Company Limited.

To be set up with an initial investment of Rs 1.25 billion each, both the partners will infuse fresh capital into the ventures as and when required. The partners are also not averse to the idea of diluting part of the equity to public for raising funds.

''We will keep a sharp eye on the capital requirements and the ways of financing it. We are not foreclosing any options,'' AIG Inc vice-chairman Frank G Wisner said.

The partners hope to turn record breakeven and turn positive in the fourth year of operations with the non-life insurance business.

''Insurance is a long gestation business and in the life insurance business, we are looking at a similar (four-year) period for profits.''

They intend to earn Rs 6 billion from the non-life business and Rs 4 billion from the life insurance business in five years.

The company is aiming at providing products and services to both urban and rural centres through a chain of agents that would be appointed soon.

''We expect to rapidly open offices in all the major Indian cities and from there on use the agent forces to get the insurance business to more difficult and more remote areas,'' Wisner said.

It has already tied-up with HDFC Bank for the non-life insurance business.

Money

Business News

Tell us what you think of this report