MUMBAI: Japanese insurance major and worlds 6th largest life insurer, Nippon Life Insurance Company on Monday signed a definitive agreement to acquire a 26 per cent stake in Anil Ambani controlled Reliance Life Insurance in a deal pegged at $680 million (about `3,062 crore). At 26 per cent it is the highest amount of stake that a foreign entity can hold in an Indian insurance firm.
Reliance Life which started its operation in 2005 with the acquisition of a life insurance company AMP Sanmar, currently fully owned by another group company, Reliance Capital and as of December 31, 2010 it managed assets of over `17,000 crore and has emerged as the largest private life insurance company among the 22 others that operate in the country.
Commenting on the deal Sam Ghosh, CEO of Reliance Capital said that this deal was the largest FDI in Indian financial services sector as well as insurance in the country.
“As a strategic partner, Nippon Life will bring vast experience, expertise and global best practices in several key areas like product development and risk management,” he said.
Ghosh did not give any timeframe for closing the deal however he added that it would happen as quickly as possible. On any initial public offer plans for Reliance Life, Ghosh said, that IPO was not a possible option at this juncture.
As on year ended March 31, 2010, Nippon Life Insurance had posted revenues of $72 billion or `3,24,000 crore with a profit of $2.6 billion or `11,700 crore. In the same period the company had sold around 1.4 million policies taking the total number of policies in force to over 14.7 million during the same period.