MUMBAI, March 22: Public sector insurance juggernauts General Insurance Corporation (GIC) and Life Insurance Corporation (LIC) have decided to float a joint venture company in Tanzania to undertake insurance business.The joint venture, christened as Tanz-India, will have an equity base of Rs 160 crore. It will undertake both life insurance and non-life insurance businesses.
LIC will pick up 20 per cent of the equity while GIC will contribute to the extent of 25 per cent. Ken-India Assurance, a joint venture of the two Indian insurance majors in Kenya, will pick up 10 per cent in the new venture and the rest will be contributed to by local partners.
Tanzania's existing insurance law makes it mandatory for foreign investors to involve the local partners while floating any business outfit in the country.
The domestic insurance majors are also undertaking a preliminary study for a possible entry into the virgin South African market.
The decision to expand business into new African territory has beenmade by the domestic companies as the Tanzanian government has recently opened up the country's insurance sector for foreign players, said sources.
Top officials of both the institutions are currently visiting Tanzania to identify the local partners and complete the preliminary formalities in setting up the company.
"As soon as these formalities are over, LIC and GIC will apply to the Reserve Bank of India seeking the central bank's permission to remit foreign exchange towards their equity participations in the new venture," senior insurance officials said.
Describing Ken-India Assurance as a successful insurance brand name in the African territory, sources said that the company had produced an excellent performance in recent times and consolidated its position as the largest insurer in Kenya.
GIC and its subsidiaries hold 45 per cent of the share capital, while LIC has a stake of 10 per cent and the balance is held by local interests.
Net premium income of the outfit increased by over 30 per centlast year. Though there was an increase in commission and expense ratio, it was compensated by reduction in claim ratio, sources said. Consequently, the underwriting profits improved during the last year. Investment income also went up substantially. With the improvement in profits, the company has been able to maintain dividend on the enhanced capital base.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
