Mumbai: Financial services firm Reliance Capital Ltd expects new premiums to grow at more than 15% in the upcoming fiscal year and 20% thereafter as it signs up clients in smaller towns and cities.
Japan’s Nippon Life Insurance Company is buying a 26% stake in Reliance Life Insurance, a unit of Reliance Capital, for $680 million.
Rules bar foreign firms to own more than 26% in an Indian insurance joint venture.
“It helps us grow our business at a faster pace,” Reliance Capital chief executive Sam Ghosh told Reuters, referring to the Nippon Life deal. “We will be expanding our presence in smaller towns in the country where savings rates are much higher.”
Reliance Life’s new business premiums, a key earnings gauge, rose 11% in the October-December quarter from a year ago to $197 million. New business premiums accounted for more than half of the total premiums in the quarter.
The main businesses of Reliance Capital, controlled by billionaire Anil Ambani, include insurance, asset management, broking and consumer finance.
Life insurance penetration in India is about 4% of gross domestic product, in terms of total premiums underwritten in a year, compared with 2.4% in China and about 13.5% in Britain.