M&M, Manulife to set up life insurance JV with ₹3,600 cr investment

Mahindra & Mahindra (M&M) and Canada-based Manulife have signed an agreement to set up a 50:50 life insurance joint venture (JV) in India with a total capital commitment of up to ₹3,600 crore ($400 million). Each partner will invest ₹1,250 crore ($140 million) in the first five years.

Subject to regulatory approval, the JV will strengthen the “existing footprint” of both the companies in the country and it underscores their commitment to enhancing the financial well-being of customers in one of the world’s fastest-growing markets, M&M said in a statement.

The aim is to be the best life insurance company for rural and semi-urban India, while serving urban customers by offering long-term savings and solutions, the statement said.

“Manulife is the best natural partner for us given their global capabilities in insurance products, underwriting, and reinsurance. With a focus on leveraging technology, the JV will build an efficient, customer-centric insurer in India. We are confident that this joint venture offers a very compelling opportunity to create meaningful value for our shareholders,” said Anish Shah, managing director & chief executive officer (CEO), Mahindra Group.

India’s life insurance market is worth more than $20 billion in new business premiums, growing at a 12 per cent compound annual growth rate over the past five years. However, a high protection gap and low insurance penetration continue to provide significant long-term growth potential.

These tailwinds position India to become the world’s fastest-growing life insurance market over the next decade, on track to become the fourth largest globally. This growth is supported by robust GDP expansion, a rising middle class, and a favourable regulatory environment, the statement said. There are 27 life insurance companies in India.

“Today marks an important milestone as we seek to enter one of the world’s fastest growing insurance markets — India. This will further strengthen our diverse portfolio and position us for tremendous growth in a mega economy of the future,” said Phil Witherington, president and CEO, Manulife.

“We have a trusted partner in Mahindra Group, with whom we already have a successful asset management collaboration, and we see tremendous opportunity to build on our efforts by leveraging their deep distribution network alongside our industry-leading agency distribution and insurance expertise,” he said.