Samsung Life eyes Pramerica stake in DLF JV for India entry

Last Updated: Mon, Feb 04, 2013 05:06 hrs

Even as ING exited the Indian insurance sector by selling off its 26 per cent stake in the joint venture (JV) ING Vysya Life Insurance to partner Exide Industries, a number of foreign players are waiting in the wings to enter India. The latest aspirant is Samsung Life Insurance, South Korea's largest insurance company. It is in talks with DLF-Pramerica to buy Pramerica's 26 per cent stake in the insurance JV.

Samsung Life, with an underwritten premium (excluding corporate pension) of 12.05 trillion KRW - South Korean Won (approximately Rs 58,000 crore) during the six months ended November 2012, has strong presence across Asia, excluding the Indian market. Samsung has registered a 25.4 per cent growth in six months, compared to the same period in 2011.

Although Samsung Life Insurance has a representative office in Mumbai, according to industry insiders, the company has not yet begun any activities in its Mumbai office. Repeated attempts to reach Samsung Life Insurance proved futile as no company spokesperson was available, neither in India nor its headquarters in Seoul, South Korea.

DLF-Pramerica is a 74:26 joint venture between DLF and American insurer Prudential International Insurance Holdings, a wholly-owned subsidiary of Prudential Financial. Pramerica is the trade name used by Prudential Financial. When contacted, the company declined to comment on the same.

According to sources, Samsung Life is in talks simultaneously with other JV partners such as Bharti Axa to acquire the 26 per cent stake owned by Axa in the JV.

"Prominent insurance players from South Korea, Japan and other Asian nations are actively looking to expand their presence in India. At a time when some partners in JV insurance firms are looking to exit, this means positive news for these foreign players and consumers as a whole," said an insurance industry expert. Asian insurance giants such as Nippon Life and Mitsui Sumitomo have already set up presence in India through buyouts.

In May 2011, Japanese major Nippon Life had bought a 26 per cent stake in Reliance Life for around Rs 3,000 crore, while another Japanese insurer Mitsui Sumitomo Insurance Company had acquired as much stake in Max New York Life Insurance Company for Rs 2,731 crore in 2012.

Hira Sadhak, former chief executive officer of LIC Pension Fund and advisor-markets and industries at Pricewaterhouse-Coopers, said, "It is an opportune time to enter the insurance industry. Since the Indian insurance market is an evolving market, at least eight to 10 years will be required to break even. If companies from abroad have a long-term strategy in their mind, then it is a good idea to enter."

Ashvin Parekh, national leader, Ernst & Young, shares a similar view. "India has a much better market than many other countries in the world. Foreign players entering the market with a long term view mean good news for industry," he said.

While the insurance industry has seen a decline in premiums, DLF Pramerica has posted a notable growth in premium collection in last 10 months.

According to data collected by the Insurance Regulatory and Development Authority (Irda), private life insurers collected Rs 18,907.07 crore from new policies in the April 2012-January 2013 period, which was down almost five per cent from Rs 19,901.1 crore collected between April 2011 and January 2012. DLF Pramerica Life, on the other hand, saw a 43.7 per cent growth in its new business premiums for the April-January period, collecting total premiums of Rs 96.84 crore for the period, compared to a collection of Rs 67.39 crore as premium for the same period in the previous year.

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