AMP, Sanmar to exit insurance

Interests of policyholders, employees and shareholders to be safeguarded.

Australia's AMP and India's Sanmar group are planning to exit the life insurance business. AMP holds 26 per cent in the joint venture and Sanmar 74 per cent.

Last month, ING Vysya Life Insurance Company was recast with ING Vysya Bank exiting the venture, making room for the cash-rich Gujarat Ambuja to take up a 14.87 per cent stake in the company.

AMP plans to restructure the insurance business and is looking at three possible options in terms of ownership.

Speaking to Business Standard, Graham Meyer, managing director, AMP Sanmar, said, "We could find a new partner for Sanmar or sell the entire business or even look at other investors."

N Sankar, chairman of the Sanmar group, said, "With AMP looking at an outright sale of 26 per cent to an existing or a new player or bringing in a new partner in the joint venture, we also plan to sell our stake of 74 per cent."

Sankar pointed out that the group had entered the life insurance business only because AMP was its partner. "We have partnered AMP for the last four years and do not think we can continue with a new partner as we do not understand the business of life insurance," he added.

"Consolidation in New Zealand and Australia is the primary driver behind the restructuring of the ownership in the Indian joint venture," said Meyer.

When asked whether both AMP and Sanmar were talking to the same investment banker, Meyer said the companies were seeking the advice of the same financial adviser, but declined to disclose the name.

Commenting on whether AMP Sanmar Life Insurance Company would be sold as a whole entity, Meyer said it was one of the options being considered.

AMP has decided to stay focused on its core wealth management businesses in Australia and New Zealand and keep its Asian focus centred in asset management through AMP Capital Investors. Sanmar has decided to use the latest development to review its stake in the business.

This is not the first time that AMP is exiting a market. Last year, it exited from the UK operations as the company was not profitable, and was a drain on its capital. The Indian joint venture is today a loss-making entity. Life insurance companies take at least seven to 10 years to break even.

AMP Sanmar Life Insurance, launched in January 2002, has an equity capital of Rs 217 crore.

Out of cover

• AMP may find a new partner for Sanmar or sell the entire business
• Interests of policyholders, employees and shareholders to be safeguarded
• Company's premium income rose to Rs 105 crore in 2004-05 from Rs 31 crore in 2003-04