Kotak Group enters general insurance; to invest Rs 100 cr
Press Trust of India Mumbai Kotak Mahindra Bank today entered the general insurance space and said it will invest Rs 100 crore in the venture that is expected to become operational in the second quarter of next fiscal.
"We have this morning received the approval from the Reserve Bank to incorporate a general insurance subsidiary after having already secured the same from Irda. We will be filing for the R1 approval from the regulator next month," said the bank, which last week announced it was acquiring ING Vysya Bank.
With the entry of Kotak, number of players in the general insurance sector is now 27.
"We will be investing Rs 100 crore from our internal accruals for the 100 percent group-owned general insurance subsidiary, which is likely to become operational somewhere during the second quarter of the next fiscal," Kotak Bank president for asset management, insurance and international business Gaurang Shah said here.
Asked if it is looking for a foreign partner for the venture, Shah said, "Not immediately, but we may look at it in future."
The group already has presence in banking, wealth management, life insurance, broking, mutual funds and private equity.
Shah said the company aims to mop up Rs 900 crore in premiums in the first five years.
"The general insurance industry collected around Rs 77,000 crore in premium last fiscal which provides a cover of close to Rs 1,000 trillion. The premium collection is growing 17 per cent per annum and is scheduled to reach of Rs 1.8 trillion over the next five years," chief executive of the general insurance venture Mahesh Balasubramaniam said.
"We are looking at appointing 250 staff for the new venture to begin with, who will comprise a mix of our own existing staff and the experienced staff from the industry outside," Balasubramaniam said, adding the company expects 60-70 percent of the business to come from bancassurance.
He said despite huge underwriting of losses in the general insurance industry, some participants are doing well. "Given our brand strength and credit rating portfolio, we will be able to make it a profitable venture," he said.
