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ING, Vysya Bank to form life insurance joint venture

Fakir Chand in Bangalore

ING Insurance, The Vysya Bank Ltd, and the Bombay-based Damani group have joined hands to form a joint venture for offering life insurance products from March 2001.

The partners will apply next week with the Insurance Regulatory and Development Authority for a trading licence that will enable them to enter into the multi-billion-rupee life insurance business across the country.

The JV will be capitalised with an initial investment of Rs 1.25 billion, pooled by the partners in proportion to their equity holding. The Bangalore-based Vysya Bank will hold the majority with a 49 per cent equity stake, while ING Insurance and Damanis will hold 26 per cent and 25 per cent of the capital, respectively.

Vysya Bank chairman K R Ramamurthy said on Tuesday that though the authorised capital of the joint venture 'ING Vysya Life' would be Rs 3 billion, the paid-up capital would be expanded in three years with fresh infusion of funds in the ratio of Rs 500 million by Vysya Bank, and Rs 250 million each by the other two partners.

As part of the Dutch-based $55-billion ING Group NV, ING Insurance is the second largest insurance player in the world offering life, group, and general insurance policies, besides pensions to customers through a range of distribution channels in around 28 countries worldwide.

Since the partners are to yet to apply to the IRDA for the licence, none of them were willing to disclose the salient features of the products and policies to be launched in the life insurance sector.

ING's Asia Pacific general manager Alexander Smyth, however, said the products would be offered at competitive prices with customer service, technology, and best management practices as their USP. It will be first BancAssurance venture in the country.

"With the nature of life insurance business being a long-term one, the venture will be able to break-even only after five years. Our goal is to have 2 million customers and 15,000 advisors by 2010. We plan to achieve these modest goals by offering attractive long-term returns," Smyth said.

Being one of the largest private banks in the country, Vysya Bank will leverage its 480-strong branch network, especially in south India to penetrate the life insurance market, with focus on the countryside, where rural folk, artisans, traders and farmers remain untapped so far.

"ING Vysya Life will fulfil Indian customer needs by offering a range of affordable products by penetrating in various segments such as self-employed, salaried, and the rural market in the southern states," Ramamurthy claimed.

As a successful investor, the Damani group would bring to the table its expertise in long-term investment with prudent market analysis and risk-taking, said its principal promoter R S Damani.

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