Australian insurer QBE Insurance Group has signed an agreement with the Rajan Raheja Group to establish a jointly-owned general insurance company in India.

Under the terms of the deal, QBE will hold a 26% stake in the joint venture company, while Rajan Raheja Group (RRG) will hold the remaining 74%. However, QBE will obtain the right to increase its shareholding to 50% when permitted to do so by Indian legislation. QBE’s initial investment will be approximately A$7 million.

This agreement marks an important strategic move for QBE as it allows the group to enter the Indian general insurance market and enhance its product and geography diversification. For RRG, this alliance will strengthen the group’s interest in the financial services sector which currently includes shareholdings in ING Vvsya Life Insurance and ING Mutual Fund.

Frank O’Halloran, QBE’s group CEO, stated: We are excited about the great opportunity offered by India’s large and rapidly growing general insurance market. We are delighted to partner with the Rajan Raheja Group which has extensive interests in India and a track record of successful joint ventures with foreign partners.

The proposed joint venture is subject to approval by the Insurance Regulatory and Development Authority of India and expects to commence writing business in early 2008.