Industrial Development Bank of India, Federal Bank and Fortis have signed a joint venture agreement to establish a new life insurance and long-term savings company for the Indian market.
The company, which is expected to become operational by mid-2007, subject to regulatory approval, will offer the Indian market a full range of life insurance and long-term savings products, including traditional and unit-linked savings plans and health and disability cover. These services will be offered on both an individual and a group basis.
The joint venture agreement follows the signing of a memorandum of understanding on July 11, 2006.
The collaboration will build a multi-channel distribution platform including bancassurance, agency and direct sales. The company will use bancassurance as a key distribution strategy because of Fortis’ global experience in the field.
Under the Agreement, Mumbai, India-based Industrial Development Bank of India (IDBI) will own 48% equity, while Fortis and Federal Bank will each own 26%, this being the maximum allowable shareholding for a foreign insurer under India’s foreign direct investments regulations.
Peer van Harten, CEO of Fortis Insurance, commented: We are very excited about this partnership and about the fact that this creates the opportunity to work together with two highly successful banks in India.
He continued: Gaining entry to the Indian life market is fully in line with our strategy to build a significant presence in Asia, especially in a market that has such huge potential.
IDBI and Federal Bank are also enthusiastic about the collaboration. Sri Venugopalan, chairman of Federal Bank, called it a landmark event for the company, while Shri Shetty, chairman and managing director of IDBI, stated: We see life insurance as a high-growth business in India and we are excited about creating value for customers by leveraging our brand value, capital strength and the track record of innovation in retail banking.