Edelweiss Capital is forming a life insurance joint venture with Tokio Marine Holdings (Japan) to tap the domestic insurance business. The JV firm Edelweiss Tokio Life Insurance will soon approach the sector regulator Insurance Regulatory & Development Authority (IRDA) to obtain a life insurance licence.
Edelweiss and Tokio Marine have together committed an aggregate initial capital of Rs 550 crore in the first phase. The entry of Edelweiss will take the total tally of life insurers in the country to two dozen.
Although the market continues to be led by public sector insurer LIC (the only Indian firm in the top 100 global asset managers in 2008), a number of private insurers have joined the industry over the last one decade after the market was opened to private sector participation.
The life insurance industry in India has grown at a CAGR of 30% over the last five years. This has been a major attraction for global insurance firms who see a flat or declining business in the mature economies.
Domestic financial services have also been looking to partner foreign firms to extend their business area while also capitalising on the current FDI cap of 26% in the sector which necessitates foreign insurers to rope in an Indian partner.
Tokio Marine Holdings is the holding company for the Tokio Marine Group which has a net worth of $18.4 billion and revenues of $39 billion for FY09 with operations across 36 countries. It has presence in both life and non-life insurance sectors.