Financial services firm Religare Enterprises said on Monday that it has signed a non-binding agreement with the world's second largest insurer Swiss Reinsurance (Swiss Re) to set up a health insurance company in India. Swiss Re would be a minority shareholder and will seek to provide its actuarial, risk management and underwriting expertise to the new joint venture, which is expected to be operational by 2010.
The proposed joint venture would strengthen Religare's diversified portfolio and bolster its presence in the insurance domain, the company said in a release to the stock exchanges.
Religare has considerable expertise in the India's health market through its other group companies like Fortis Healthcare, Super Religare Laboratories and Religare Wellness. For Swiss Re, this investment represents a further commitment to the development of health insurance business in emerging markets, with India as a core area of focus.
According to Religare, the health insurance sector in India has shown a compounded annual growth rate (CAGR) of around 40% in the six years to FY08, helped by factors such as the introduction of specialized health insurance companies and third-party administration companies as well as socio-economic trends and regulatory changes. The outlook for the Indian health insurance industry remains positive, as it is expected to grow at a CAGR of at least 25 percent by FY2015 to reach a market size of approximately Rs.28, 000 crore.
Christian Mumenthaler, Swiss Re executive board member and head of Life & Health Underwriting said, " Swiss Re's interest in a health insurance joint venture is a natural extension of leveraging our actuarial and underwriting expertise in the important Indian market."
Swiss Re has been present in India since 1998. In 2000, it established Swiss Re Shared Services company in Bangalore, and later in 2000, it opened a service company in Mumbai to provide service to Swiss Re Zurich in its reinsurance activities.
Over the weekend, Religare announced that it had forayed into housing finance business by acquiring a 87.5 per cent stake in Maharishi Housing Development Finance Corporation (MHDFC) for an undisclosed amount. Under the share purchase agreement entered into with MHDFC, Religare agreed to infuse about Rs.93.09 crore following the acquisition of a controlling stake in the company. Upon completion of the acquisition, MHDFC will become a subsidiary company of Religare.
Separately in a media interview recently, Sunil Godhwani, CEO and MD of Religare Enterprises said that the firm would look at expansion opportunities regardless of the market scenario. He defended the company's decision to step into the housing finance market and sees better prospects with regards to their core brokerage business. On the BSE, Religare was last trading at Rs.476, down 1.95% from its previous close.
For comments and feedback: editorial@rttnews.com