MUMBAI: Mahindra & Mahindra has entered into an equal joint with the Canadian insurance major Manulife for a life insurance venture which will see the partners together investing around Rs 7,200 crore over the next one decade.
“The proposed 50:50 life insurance joint venture, subject to regulatory approvals, will get a total capital commitment of up to Rs 3,600 crore each over the next 10 years or so. Each shareholder is expected to invest Rs 1,250 crore in the first five years,” Anish Shah, group managing director told reporters overall concall Thursday.
He said they will seek Insurance Regulatory and Development Authority (IRDAI) and other regulatory approvals over the next three months and hopes to start commercial operations in the next 12-18 months and going by the industry average of breaking even in the tenth year.
Mahindra already has a partnership with the Canadian financial powerhouse for its asset management business, Shad said, and hopes to cash in on the strong distribution franchise of group arm Mahindra Finance which has over 1,340 branches.
Shah further said the new company will be housed under the parent M&M and not under its financial services arm.
However the focus of the new venture will be semi urban and rural markets given the very low (2%) penetration of life insurance in those markets, Shah said with product focus being protection cover along with savings.
The domestic life insurance market has surpassed the $20-billion-mark in new business premium, growing at a 12 percent annually pver the past five years. Yet, the country continues to have a high protection gap and low insurance penetration, providing significant long-term growth potential.
While Shah said he is “confident of the joint venture offering a very compelling opportunity to create meaningful value for our shareholders,” Phil Witherington, president of Manulife, “sees tremendous opportunity to build on our efforts by leveraging their deep distribution network alongside our industry-leading agency distribution and insurance expertise.”
Mahindra has been a trusted partner for Manulife in its asset management business (Mahindra Manulife Investment Management) since 2020, Witherington added.
Founded in 1945, the Mahindra group is one of the largest companies employing 3,24000 in over 100 countries. It enjoys a leadership position in farm equipment, utility vehicles. It also is the world’s largest tractor company by volume. That apart the group also has presence in renewable energy, agriculture, logistics, hospitality and real estate.
The Toronto, Canada-headquartered Manulife Financial Corporation is an international financial services major with over $1.1 trillion assets under its management. Manulife is present across Canada, Asia, and Europe, and as John Hancock in the US, providing financial advice and insurance for individuals, groups and businesses, serving over 36 million customers.