IAG, State Bank of India enter into general insurance venture
Insurance Australia Group (IAG) has signed a $170 million joint venture agreement with the State Bank of India (SBI) to establish a general insurance company in India to support its long term growth and profitibablity.
The newly formed company is expected to commence trading in 2009 at which time IAG's investment will be made.
IAG will initially hold 26 per cent of the joint venture, the maximum allowable under India's current foreign investment rules. It will have an option to increase the stake to 49 per cent in the future subject to regulation and other conditions.
Indian market has been a priority for IAG for some time and the venture with SBI, India's largest commercial bank with over 100 million customers and 11,000 branches, is a unique opportunity and will build value for shareholders in the medium to long term.
SBI chairman Mr. OP Bhatt said the joint venture will help deepen the insurance market in India.
"Insurance penetration in India is very low and the general insurance industry is expected to grow at a brisk rate of 15 per cent to 20 per cent per annum over a period of the next 10 years," Mr OP Bhatt said.
"I am sure that this venture, like our Life Insurance venture SBI Life, will also emerge as a leader within a short span of time. SBI will be able to provide protection to people even in the remote rural and semi urban areas throughout the country and help deepen the market," he said.
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