Tokio Marine to up stake in Indian unit
Japanese group seeks to tap fast-growing insurance market
TOKYO -- Japan's Tokio Marine Holdings will make a full-fledged foray into the Indian insurance market by spending 25.3 billion rupees ($392 million) to increase its stake in a local joint venture from 26% to the maximum legal limit of 49%.
The casualty insurer will also dispatch additional directors to the site to increase its sway over management at the unit, hoping to tap into a market that is growing by double digits every year.
In 2015, India relaxed regulations, allowing foreign parties to take stakes up to 49% in its insurers. Japan's large insurers have held stakes in Indian units, but this marks the first time one will raise its interest up to the new limit.
Joint venture IFFCO-Tokio General Insurance is the fourth-largest private-sector player in the Indian market, and was formed in 2000 with the Indian Farmers Fertilizer Cooperative and a subsidiary of Tokio Marine. Currently, the Japanese partner has two directors sitting on the unit's board, but this will be increased to five after the additional investment. It will also send several members to sit on the governance committee.
Auto policies accounts for half of IFFCO-Tokio's sales, but the unit is also strong in areas such as crop insurance. It has a network of more than 600 branches that are mainly located in rural areas and smaller cities, but Tokio Marine plans to expand this in order to strengthen sales to the middle class.
The Indian insurance market is worth more than $20 billion in terms of premium income and is expected to grow at an annual rate exceeding 10%.