The Economic Times daily newspaper is available online now.

    Kotak Mahindra's insurance venture to get fresh boost from group's deal to buy ING Vysya Bank

    Synopsis

    Kotak Mahindra's insurance venture -Kotak Mahindra Old Mutual Life -is a joint venture be tween Kotak Mahindra Bank and South Africa-based Old Mutua Public Ltd Co.

    ET Bureau
    MUMBAI: Kotak Mahindra's insurance venture is likely to get a fresh boost from the group's deal to buy smaller rival ING Vysya Bank. The strong SME portfolio of ING Vysya is seen helping Kotak extend its reach to the southern states.

    ING Vysya, in which Dutch lender ING group holds about 43% stake, has 573 branches. It was selling insurance policies of Exide Life Insurance after the ING group exited the life insurance business in India last year by selling its 26% stake in ING Vysya Life Insurance to the Exide group. The distribu tion partnership ended this month. The bank had floated a pro posal for a new distribution tie-up before the deal with ING Vysya was announced. “Potentially , con tribution of bancassurance chan nel should go up to 60-70% after the deal goes through,“ said an execu tive of Kotak Life Insurance. “This should take us two levels up.“

    Kotak Mahindra's insurance venture -Kotak Mahindra Old Mutual Life -is a joint venture be tween Kotak Mahindra Bank and South Africa-based Old Mutua Public Ltd Co. Old Mutual holds a 26% stake, the maximum limit permissible by law.

    Kotak Bank accounts for 35-40% of the new business premium of Kotak Mahindra Old Mutua Life, which was ranked ninth among private insurers in terms of new business income as on

    March 31, 2014. It sells traditional and unit-linked insurance plans through most of its 641 branches.

    Kotak Life Insurance has been reporting profit for the last five years. It's one of the first insurance companies to have wiped out its accumulated losses. Insurance companies generally take a few years to wipe out losses incurred during the previous year after reporting profit. Kotak Life Insurance mostly sells traditional products with the ratio at 60:40. The life insurance arm of the bank reported a profit of Rs 52 crore in the first half of the current financial year, up from Rs 44 crore a year ago.

    The company was unfazed during the domestic insurance sector's rough patch in 2010 when cost-cutting led to closing down of several insurance company branches. In the first half of the financial year, Kotak Life Insurance's total new business income increased 3.8% from a year ago to Rs 548 crore.


    (You can now subscribe to our Economic Times WhatsApp channel)
    (Catch all the Business News, Breaking News Budget 2024 News, Budget 2024 Live Coverage, Events and Latest News Updates on The Economic Times.)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    ...more
    The Economic Times

    Stories you might be interested in