Q3 Earnings Alert! Plan early for this week’s stock reports with all key data in 1 placeSee list

India's more relaxed rules on investment in insurers set to attract U.S., European players

Published 01-02-2021, 06:31 pm
Updated 01-02-2021, 06:36 pm
© Reuters.
PRU
-
GASI
-
AIG
-
ICBK
-
ICIR
-

By Aditya Kalra and Abhirup Roy

NEW DELHI, Feb 1 (Reuters) - The Indian government on Monday said it plans to raise limits on how much foreign companies can invest in the country's insurance industry, a move that could attract inflows from U.S. and European insurers.

Finance Minister Nirmala Sitharaman in her budget speech for 2021-22 said the government would allow foreign direct investment of up to 74% in insurance entities, up from 49% currently, clearing the way for "foreign ownership and control with safeguards". change could attract investments from international insurance companies, industry sources said, many of which have existing joint-venture operations in India, including from American International Group AIG (NYSE:AIG).N and United Kingdom's Prudential Plc PRU.L .

Take up of life and health insurance products is low in the country of 1.3 billion people but is expected to grow. The country's investment promotion agency, Invest India, expects the insurance market to be worth around $250 billion by 2025.

"It's a huge market by size for them. That is the main driving force for companies," said an Indian lawyer who advises global insurance firms.

A second lawyer said several insurers from Asia have also shown interest in ramping up India investments, and started seeking more details about Monday's proposal hours after it was announced.

State-run Life Insurance Corporation dominates India's life insurance market, but private players have rapidly grown in size.

ICICI Prudential Life Insurance ICIR.NS - a joint venture between ICICI Bank ICBK.NS and Prudential - last year said its assets under management crossed 2 trillion rupees ($27.4 billion). Prudential said in August last year that India is a market where it has "significant investment appetites for growth".

More relaxed rules for foreign investment in insurance will also help some Indian insurers to attract capital and boost their businesses after a slowdown caused by the COVID-19 pandemic.

"The imperativeness of the life insurance sector in the economy has gained paramount importance in the aftermath of COVID," Niraj Kumar, Chief Investment Officer of Future Generali India Life Insurance, an Indian JV of Italy's Assicurazioni Generali SpA GASI.MI , said in a statement.

"The bold step ... will provide an immediate backstop in terms of capital for growth and improve the insurance penetration and financial inclusion in the economy."

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.