Private sector insurer Reliance Life today said it has been approached by some banks for partnership based on equity-participation in the company and it was open to exploring such opportunities.
In lieu of minority equity stake, such partnerships help insurers tap the bank's vast distribution network for sale of their life insurance products.
"Reliance Life has been approached by a few banks to explore 'equity participation' based partnership models," Reliance Life Insurance Company's President and Executive Director Malay Ghosh told reporters here.
Reliance Life is one of the leading private sector insurer in the country and part of Reliance Capital, the financial services arm of Anil Ambani-led Reliance group.
"We are open to exploring innovative partnership structures, including equity partnership to leverage the Bancassurance opportunity," Ghosh said.
He said that Reliance Life's partner Nippon Life Insurance was also in agreement with this strategy.
Earlier this year, Reliance Life announced sale of 26% stake to Japan's Nippon Life for Rs 3,062 crore in the country's largest ever FDI in insurance sector. The deal, which valued Reliance Life at about Rs 11,700 crore, is currently awaiting approval from various authorities.
Ghosh said that Reliance Life soon expects the approval for the deal.
While he declined to disclose the name of the banks that have approached it for equity participation, Ghosh said that "if any third party is interested in stake purchase, then that company would buy from the 74% stake remaining with Reliance Capital."
When asked about any IPO plan in the near future, he said there was no such plan as of now.
Bancassurance has emerged as a major distribution channel for life insurance industry, which is a highly distribution driven business.
Besides, those bancassurance partnerships where the bank has a stake in the insurance company tend to work better.
Insurance products are generally sold and not bought and therefore role of intermediaries is of utmost importance in the life insurance business.
Banks with their wide branch networks, trained staff, large customer base and high number of customer walk-ins are among the ideal distributors.
Over the last decade, banks have started contributing to 20-30% of the life insurance business for private Insurers, while it is as high as 60% for some companies.