LIC to sell policies in Saudi Arabia via JV

To open representative offices in the US, Singapore.

A three-way joint venture set up by Life Insurance Corporation of India (LIC) will soon start selling insurance policies to the public in Saudi Arabia.

The public sector life insurer along with general insurer New India Assurance and Saudi Arabia's Al-Hokair Group has set up Saudi India Company for Cooperative Insurance (SICCI), which recently issued an initial public offering (IPO) for 40 per cent of the shares and raised 40 million Saudi rials (about Rs 46 crore).

The regulations in Saudi Arabia require new insurance companies to offer 40 per cent of the shares to locals before starting operations.

LIC expects to get an operating license by July/August end. LIC along with its subsidiary, LIC International, holds 20.4 per cent stake in SICCI, while New India Assurance has 10.6 per cent stake and Al-Hokair Group 29 per cent stake.

The IPO for the balance 40 per cent was subscribed 8.5 times. The setting up of the 100-million Saudi rials insurance company was announced by Finance Minister P C Chidambaram during his visit to Riyadh in April 2005.

"Saudi India Company is a composite insurance company which will sell both life and non-life products. The IPO was very well received. The matter is now with the Ministry of Commerce of Saudi Arabia and by July or August end we hope to get the license as it is now only a procedural formality," said a senior LIC official.

LIC is also working towards setting up representative offices in Singapore and the United States of America. In January 2007, the Insurance Regulatory Development Authority (Irda) had issued regulations for insurance companies wanting to open representativeiaison offices overseas.

"In accordance with the guidelines, we have applied to the Irda for approval for setting up representative offices in the USA and Singapore. After Irda's approval, we will apply to the regulators of the concerned countries for opening representative offices," said a senior LIC official.

Speaking about the reasons that prompted LIC to consider opening representative offices in the two countries, D K Mehrotra, managing director, LIC said, "The economies of the US and Singapore are stable.

"Both these countries have a significant population of non-resident Indians and there is a growth story in the coming years."

In November last year, LIC (International) BSC (C), Bahrain - a subsidiary of Life Insurance Corporation of India in Bahrain - got the permission to sell insurance policies to the public in Bahrain from the Central Bank of Bahrain.

LIC started its Bahrain operations in 1989. LIC (International), Bahrain operates in Bahrain, Saudi Arabia, Oman, Qatar, UAE and Kuwait, and has permission to sell insurance only to non-resident Indians.