Confident of India’s robust growth potential despite the short-term economic headwinds, Japan’s Nippon Life said it would put to use all its resources to help its Indian partner Reliance Life become the country’s top life insurance company.
Nippon Life, Asia’s largest private life insurer and seventh biggest globally, has an asset of $650 billion and has made two of the largest foreign direct investments in the Indian financial services sector — about Rs 3,000 crore in Reliance Life and about Rs 1,500 crore in Reliance Capital Asset Management Company.
Listing out the factors that attracted it to India, Nippon’s President Yoshinobu Tsutsui said numbers like overall population, the demographic percentage of young people and steadily rising per capital GDP make India a very attractive investment destination for it.
Asked about the policy-related headwinds in the country, Tsutsui said Nippon does not get perturbed by such issues. “We are not worried about at all. Because we are a life insurance company and we invest from long term perspective,” he said in an emailed interview.
“When I say long term perspective, we don’t look at short-term fracturation of the market, due to the currency and the short-term spilling down of the economy. I believe that India is a growing market in the long term,” Tsutsui noted.
Asked about its expectations from Reliance Life as a partner, he said: “My first hope is that Reliance life will become No.1 life insurance company in India. And to realise that goal, we are more than happy to utilise all the resources we have got to realise that dream for Reliance Life.”
While state-run LIC is the country’s largest life insurer overall, Reliance Life Insurance has been the largest private life insurance company in terms of number of policies (over nine million) for two consecutive years as on March 31, 2012.
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However, Reliance Life was the country’s seventh largest private life insurer in terms of total new business premium and sixth in terms of individual new business premium for the last fiscal ended March 31, 2012.
The company recorded its first full year of profits in 2011-12 with profit before tax of Rs 370 crore and commands a private sector market share of over 5 per cent.
Nippon’s 26 per cent stake purchase for Rs 3,062 crore pegged Reliance Life’s total valuation at about Rs 11,500 crore. Besides, Nippon Life has also acquired 26 per cent stake in RCAM, the Anil Ambani-led Reliance Group’s mutual fund business, for about Rs 1,500 crore.
These investments have come at a time when concerns are being raised in certain quarters about a perceived notion of slowing pace of reforms in the country, especially in areas like FDI policies.