Reliance Nippon Life Insurance Company Ltd is looking to acquire a peer as part of its strategy to expand its distribution network, a top executive said on Monday.
The company, a joint venture of Reliance Capital Ltd and Japan’s Nippon Life Insurance Company, is looking to acquire a peer that has a bank partner and an established distribution channel. It is also in talks with some banks for a bancassurance tie-up.
“With over 20 insurance players in the Indian Insurance market, there is bound to be consolidation in this sector,” said Sam Ghosh, executive director and group CEO, Reliance Capital Ltd. “We are open to value-accretive acquisitions in this space, especially with a view to strengthen our distribution network and would be keen to acquire companies with strong business model and bancassurance channel.”
Earlier on Monday, The Economic Times reported that Reliance Nippon Life Insurance was looking to merge with a competitor that had a strong distribution network. However, the spokesperson clarified that the company was looking at an acquisition and not a merger.
Reliance Nippon Life is primarily an agency-led insurer with about 770 offices and 80,000 advisers across India. The company is amongst the few insurers not to have a bancassurance tie-up.
India’s life Insurance sector is dominated by companies that get more than half their revenue through sales from bancassurance channels, said the company. “We are also in talks with some large banks for a bancassurance tie-up and hope close some distribution partners soon” said Ghosh.
In 2015, the Insurance Regulatory and Development Authority of India allowed banks to tie up with up to nine insurers from three segments—life, non-life and standalone health insurers—as part of the new bancassurance guidelines. A bank was earlier allowed to tie up with only one life insurer.
Reliance Nippon Life has a market share of 4% in the private sector with a total premium Rs 4,371 crore in 2015-16, according to its annual report. Renewal premium rose 11% to Rs 2,840 crore. It had total funds under management of Rs 15,970 crore.
Nippon Life, Japan’s largest life insurer, had raised its stake in Reliance Life Insurance to 49% for Rs 2,265 crore in November 2015.
Reliance Capital plans to increase its distribution reach five times to 25,000 cities and towns and double the number of business partners to one million.
India's crowded life insurance industry has 24 companies and is dominated by state-run Life Insurance Corp. SBI Life, a joint venture of State Bank of India and BNP Paribas, ICICI Prudential Life Insurance Co. Ltd and HDFC Life Insurance are the top private-sector life insurers by premium income.
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