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AXA is first foreign insurer to increase stake in insurance jv to 49%

May 7, 2015

Paris-headquartered insurer AXA has received the Indian government’s approval to raise its stake in two local insurance joint ventures with Bharti Enterprises to 49%, according to a government statement.

This is the first stake increase proposal to get the green light from the Foreign Investment Promotion Board (FIPB) since Parliament amended the insurance law in March to increase the foreign ownership limit in insurance companies in India to 49%. AXA holds a 26% stake each in Bharti AXA Life Insurance and Bharti AXA General Insurance, with Bharti Enterprises owning the remainder. The increase in AXA’s stake will see the French insurer pump INR8.59 billion (US$135 million) into the life insurance venture and INR4.31 billion in the general insurance venture, India’s Finance Ministry said in a statement. Other foreign insurers are planning to increase their stake in their Indian insurance joint ventures as well.

American insurer Cigna will increase its stake in Indian JB-Cigna TTK Health Insurance from the present 26% to 49%. Separately, Bank of India has started the process to dilute its stake in Star Union Dai-ichi Life Insurance from the existing 48% level to 25-28%. Star Union Dai-ichi Life Insurance is a joint venture between Bank of India, Union Bankof India (26% stake) and Tokyo-based Dai-ichi Life Insurance (26%). Japanese insurance giant Tokio Marine is set to increase its stake in its life insurance joint venture in India — Edelweiss Tokio Life Insurance, reported the Times of India. The hike will be effected through an issue of fresh equity and result in a capital infusion of INR4.5-5 billion into the joint venture. Tokio Marine currently holds a 26% stake in the venture.

In March, State Bank of India (SBI), the country’s largest lender, announced that it would divest a stake of up to 10% in its life insurance arm SBI Life. The life insurer is a joint venture between SBI and BNP Paribas Cardif of France. At present, SBI owns 74% of the total capital and BNP Paribas Cardif has the remaining 26%. SBI also said that it would dilute its stake in its general insurance venture SBI General. The bank currently holds 74% of the non-life insurer while Insurance Australia Group owns 26%. After the divestment, SBI will have a 51% stake with IAG holding the remaining 49%.

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