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AIA to up stake in insurance JV with Tata to 49%
Other | Photo Credit: Reuters

Hong Kong-based insurer AIA Group Ltd has agreed to increase its stake in its joint venture with Tata Sons Ltd, in yet another transaction in the Indian insurance sector after the government allowed higher overseas investment in the industry.

AIA will raise its holding in Tata AIA Life Insurance Company to 49 per cent from 26 per cent, the two partners said on Monday. They didn’t disclose any financial details.

The life insurance company began operations in 2001 when the Tata group tied up with American International Group Inc. AIG exited its Asia business by selling a stake in AIA after it was hit by the US subprime crisis and bailed out by the US government. AIG’s stake in the Indian insurer was taken over by AIA in 2012.

India opened insurance for private companies in 2000 while also allowing foreign players to take a 26 per cent stake. While the government had from time to time thought about raising the foreign holding limit, the decision came only in March this year. Since then, 14 deals have been announced with a total disclosed value of $2.2 billion, according to data from VCCEdge, the data research platform of VCCircle.

British health insurer Bupa Plc, Japan’s Nippon Life and Tokyo Marine, UK insurer Aviva Plc, French firm Axa and Australia’s QBE Group and Insurance Australia Group Ltd are among the companies that have raised or are planning to raise their stake in their Indian insurance JVs.

Last week, Canada based Sun Life Financial announced plans to increase stake in Birla Sun Life Insurance, a joint venture with Aditya Birla Nuvo to 49 per cent by spending Rs 1,664 crore for the additional 23 per cent.

Late last month, state-run Allahabad Bank said it planned to sell all or part of its stake in Universal Sompo General Insurance Co. Ltd. The bank is the largest shareholder in the insurance firm with a 30 per cent stake. Japan's Sompo Japan Nipponkoa Insurance Inc has a 26 per cent stake in the JV while other Indian partners hold the remaining.

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