Life Insurance Corporation of India, its foreign arm LIC International and the New India Assurance Company will join hands for setting up a joint venture company in Saudi Arabia to offer life and non-life insurance products to non resident Indians and other residents in the Kingdom.
Bahrain-based LIC International, LIC India and the New India Assurance will form the new venture, Saudi Indian Insurance Company, and the registration process with the Saudi Arabian Monetary Agency (the Saudi Central bank) is in its first stage, a senior official said.
"LIC India and the LIC International along with New India Assurance and FA Al Hoiker have formed a venture. The initial share capital is likely to be around SR 100 million" (approx Rs 1,100 million), LIC International managing director M K Santhanam said.
"LIC, LIC (Bahrain) and New India Assurance will together have a 31 per cent equity stake" in the new venture, he was quoted as saying by the Bahrain Tribune newspaper.
While FA Al Hoiker would have 29 per cent holding in the company the rest (40 per cent) would be offered to public through an initial public offer.
He said the move represents LIC's entry into the Saudi Arabian market and a departure on the part of the Indian government, which sanctioned Rs 280 crore (Rs 2.8 billion) till March 2005 for the insurance giant to fund its international activities.
The Saudi Arabian General Investment Authority earlier this month issued licenses to 13 insurance companies for starting operations in the Kingdom and the Indian company was one of them.
The licensing of companies comes at a time when the government is all set to introduce compulsory cooperative health insurance scheme for expatriates from June this year.
The health ministry has directed that any company with a work force of 500 or more expatriates must provide them with medical insurance coverage before they are issued a residence permit.
The Saudi insurance sector is estimated to be worth $1.33 billion and the number could double over the next decade as the market expands.