Sanlam on Thursday announced it has entered into a joint venture agreement with the India-based Shriram Group to form a new life-insurance business, the Shriram Life Insurance Company.
”As we outlined in our 2004 annual report to shareholders, we will consider selective international opportunities with the potential to enhance profitability on a sustainable basis,” Sanlam chief executive Johan van Zyl said in a statement.
Sanlam and the Shriram Group will hold 26% and 74% share of the company respectively.
The joint venture with Shriram follows Sanlam’s earlier international expansion with the acquisition of Merchant Investors Assurance in the United Kingdom in 2003.
More than 80% of India’s insurable population is not covered. The market share is only at 2,3% of gross domestic product. This is ”extremely low” compared with other developing countries.
Sanlam will provide product development, administration and sales training skills, while the Shriram Group will contribute a leading brand, a strong track record in marketing financial products and an extensive distribution network.
”We are confident that we can create a leading Indian insurance company by combining our insurance skills and the Shriram Group’s strong track record in providing financial services, by capitalising on their extensive distribution network,” said Lize Lambrechts, CEO of Sanlam Life.
Operations are expected to start in August.
Sanlam did not disclose the amount of its initial investment in the venture. It will fund its shareholding in the joint venture through cash. — Sapa