Mumbai: Prudential Financial Inc., the second-largest US life insurer, will form a life insurance company in India with realtor DLF Ltd, entering a market that raises $24 billion (Rs1,06,907 crore) a year in premiums.
Prudential Financial will own 26% of the venture, the maximum allowed under federal insurance ownership laws, according to a joint statement distributed late yesterday by both companies on the Business Wire. DLF, based in New Delhi, will own the rest.
Newark, New Jersey-based Prudential joins HSBC Holdings Plc. and Sompo Japan Insurance Inc. in expanding an insurance market where less than 3% of 1.1 billion Indians are insured, according to the Insurance Regulatory & Development Authority. Rising incomes and an increasing reliance on modern financial instruments to mitigate risks have boosted premium collections, which have risen 21% annually for the past seven years.
“India’s rapid development has created new opportunities for people seeking to protect their families, using life- insurance products,” Rodger Lawson, Prudential Vice Chairman, said in the statement.
HSBC, Europe’s largest bank, will form a life insurance venture in India with state-run Canara Bank and Oriental Bank of Commerce, according to a statement issued by the banks yesterday.
Indian rules cap the ownership of overseas partners in insurance ventures at 26%. While the government is committed to raising the limit to 49%, communist allies of the Congress party-led ruling alliance are opposed to higher overseas ownership.