UK-based financial services major Aviva Plc is planning to exit from its over 10-year old Indian joint venture life insurance company with diversified FMCG player Dabur.
It may pull out of its Indian insurance joint venture, valued at more than $500 million, as the British insurer retreats from less-profitable markets where it has struggled to expand. Aviva, which aims to cut costs by 400 million pounds ($611 million) by year-end, is in the process of hiring corporate advisors to find buyers for its 26 percent stake in Aviva Life, its venture with Dabur Group.Dull market and uncertainty about FDI cap raise seen as reasons.The insurer had identified China and India as "high priority" and "must win" markets, but the move to sell out of India signals a change in that strategy.
Last year, Aviva hired former AIA Group Ltd CEO Mark Wilson to lead a turn around in its business which was hit by slower growth in its main market Europe.Life insurance penetration in India is about 3.4 percent of gross domestic product in terms of total premiums underwritten in a year.Indian laws limit foreign ownership in domestic insurers to 26 percent. Government approval for a proposal to raise the limit to 49 percent has been pending for a long time due to opposition by nationalist politicians.Foreign insurers including Britain's Standard Life, Canada's Sun Life, Prudential, Japan's MS&AD, Italy's Generali and Dutch insurer Aegon operate in India through joint ventures with local companies.New business premiums of life insurance companies saw a 4.1 per cent drop for April and May, as compared to the same period last year. Private life insurers saw a 7.8 per cent drop in new premium collection to Rs 2,960 crore in this period.Aviva Life collected new premiums of Rs 687.49 crore for the year ended March 31, compared to Rs 799.52 crore collected in financial year 2011-12, showing a drop of 14 per cent. Life insurance industry saw a 6.3 per cent drop in new business premiums for financial year 2012-13.
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