The Hindu : Business : Shriram forms venture for life insurance

Online edition of India's National Newspaper
Friday, May 20, 2005

Business

Business

Shriram forms venture for life insurance

K. T. Jagannathan

Joins hands with Sanlam Life of South Africa

CHENNAI: The Shriram group, a well-known name in the truck and chit business, on Thursday, announced that it had tied up with Sanlam Life Insurance of South Africa to enter the life insurance sector.

The new entity, christened Shriram Life Insurance Company Ltd., will have an initial equity capital of Rs. 125 crores. Shriram City Union Finance and Shriram Financial Holdings will together hold 74 per cent in the joint venture. A substantial part of the Indian equity will come from Shriram Financial Holdings. The South African company will hold 24 per cent stake.

Addressing a press conference, R. Thyagarajan, Chairman of the Shriram group, hoped that the new venture would get `first stage of licence' from the IRDA (Insurance Regulatory and Development Authority) by this month. He expected the joint venture to commence operations by the end of August. The formal launch of the product would be in the first week of September, he added.

The insurance venture would collect a premium income of Rs. 150 crores in the first full year of its operations, he said. "We are taking up the challenge." The group's huge agency force, large customer base and wide network of offices would prove a big advantage for the insurance venture, he added.

The insurance venture would be headquartered in Hyderabad.

He said a significant portion of the business for insurance joint venture would come from Shriram channel as against the bancassurance model pursued by many a private life insurance outfit. He also hinted that the group could get into non-life business sometime later but did not elaborate.

Lize Lambrechts, Chief Executive Officer of Sanlam Life, said the South African company saw in India a big potential. "We can add a lot of value to the venture,'' she added. Established in 1918, Sanlam is one of the largest life insurers in South Africa with 3.2 million individual policies under administration. Since Sanlam was unknown in India, it had decided to piggy-ride on a well-known Shriram brand, she added. Sanlam would be the second group from South Africa to enter the Indian insurance space. Old Mutual, it may be recalled, had already tied up with Kotak Mahindra.

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