While CMG Asia, the second largest insurance group, is scouting actively for an Indian partner, GIO has already tied up with south-based conglomerate, Sanmar group that has diverse interests including chemicals, engineering, cements, shipping and textiles.

Sanmar group chairman N Shankar visited Sydney recently to discuss the new company's structure after the government indicated that the Insurance Bill allowing up to 40 per cent foreign equity in the sector would be passed in the current session of the Parliament.

``The rules of the game have not been made clear yet but we have tentatively decided to pick up at least 26 per cent equity initially,'' Sanmar group vice-chairman Narayanan Kumar said.

CMG Asia general manager (business development) Patrick Amos, whose company manages funds valued at over US $ 45 billion, said the company waslooking for a partner with considerable geographic spread and expertise in distribution. ``The penetration rate in life business in India is very low and we see a big opportunity here despite the monopoly status of state-owned Life Insurance Corporation,'' he said.

At present, some uncertainty clouds the operations of gio in australia as the largest insurance company down under, amp, had stepped up efforts to acquire the company, kumar said.

But he clarified that it would not affect the memorandum of understaning between sanmar group and gio or delay its effort to start an insurance company as soon as the bill was passed.

Insurance is a capital intensive business and those who did not have adequate financial resources should not +even be thinking about it+, amos said.

+we are a company with 125 years experience in the business and what we would be bringing in significantly is technical expertise+, amos, whose company has operations in united kingdom, thailand, phillipines, malaysia and singaporebesides new zealand and australia, said.

Kumar agreed that the insurance business was capital intensive and said the minimum paid-up capital requirement of rs 100 crore as recommended by malhotra committee would inevitably lead to a shake out after some years.

+not many companies have the wherewithal to meet the condition and sustain the business+, he said and expressed concern over the sluggish secondary market that would make raising money difficult.