SBI General in talks to raise foreign partner's stake to 49 per cent
SBI General Insurance, the non-life insurance subsidiary of State Bank of India, is in talks to increase the stake held by Insurance Australia Group to 49%.
"In our JV agreement, there is a clause with our foreign partner IAG to allow them to hike their stake to 49 per cent, as and when the law permits it. When new Insurance Bill is passed, our JV partner will be interested to raise their stake to 49 per cent," SBI General Insurance managing director and chief executive Bhaskar Jyoti Sarma told PTI.
SBI group chairperson Arundhati Bhattacharya had recently said the bank was looking for divestment of some stake in SBI General, particularly after the Insurance Ordinance was issued.
The government in December last year promulgated the Ordinance for raising foreign investment cap in the insurance sector to 49 per cent from 26 per cent earlier. The Ordinance, however, yet to be cleared by Parliament.
When asked whether they are talking to other partners, Sarma said he does not see any new global player putting in money into the company.
"I don't think any new player will come into the picture as we are not yet eligible for getting listed. The quantum of capital infusion by our foreign partner will depend on the valuation, the process for which is expected to start shortly," he said.
Meanwhile, speaking with reporters in Chennai, SBI General Insurance Deputy CEO Steve Hollow said, "We have started discussing with SBI. But we still need to see the passage of legislation in Parliament."
"Currently, the stake by Insurance Australia Group (IAG) is 26 per cent. We are in discussions to increase it to 49 per cent," he said.
The proposal to increase stake comes in the backdrop of capital requirement of the company. "There will be a substantial capital requirement by next fiscal", he said.
After unveiling the SBI General Group Health Insurance Policy, here, Hollow said the company pegs a total premium of Rs 1,600 crore by March 2015 compared to Rs 1,200 crore premium registered last year.
"We are looking at a total premium of Rs 1,600 crore by this financial year. Our target is grow at 50 per cent in the following fiscal", he said.
Asked on the factors that would contribute 50 per cent growth next fiscal, Hollow said the company plans to increase its agents from the present 6,000 to 10,000 by next financial year. "There is lot of potential here in India. Economy has started improving", he said.
To a query, he said the domestic insurance sector was valued at Rs 32,000 crore growing at a compounded annual growth rate of 20 per cent.
The company has nearly 70 branches and by March it should be 85-90.
"We want to strengthen both agents and brokers. Currently there are 300 insurance brokers and the company has tied up with 220 of them. We are now focusing on increasing business through the broker channel," Sarma said.
On the premium front, Sarma said the company has set a target of crossing Rs 2,400 crore by the next fiscal.
"In terms of policies, we have done 12 lakh policies until January and we are looking at 15 lakh by March, and 20 lakh by March 2016," Sarma said.
"Bancassurance model brings in the maximum business at around 60 per cent and out of that 80-90 per cent of this is done by SBI staff, who are around 12,000 and the balance is coming through direct sales at SBI branches," he said.
Sarma said the company is planning to mop up Rs 100 crore through premium collection from its existing health insurance plan, meant for the S/B account holders of SBI by March.
"We have already made premium collection of over Rs 50 crore from our group health insurance plans which is meant for all the S/B account holders so far. We want to close the current fiscal by a total premium collection of around Rs 100 crore from the scheme by the end of the current fiscal," he said, adding there is no pre-policy medical examination for the SBI customers.