Mahindra inks pact with Manulife to set up 50:50 life insurance JV in India

New Delhi, Nov 13 (PTI) Mahindra & Mahindra on Thursday said it has inked a pact with Toronto-headquartered Manulife to establish a 50:50 life insurance joint venture, entailing an investment of Rs 7,200 crore from both partners.

Mahindra Group CEO & MD Anish Shah stated that the partners were looking to create a business which can accomplish a valuation ranging between Rs 18,000 crore to Rs 30,000 crore in ten years.

"Now, we do believe this is a conservative set of numbers, which we can achieve,” he said in a virtual press conference.

Shah noted that the partners aspire to make the JV the number one life insurer in rural and semi-urban India.

"We will be a significant player in urban India as well, and there we would want to take a leadership position in protection solutions, one that India is under-penetrated in today, and there are specific reasons why we feel that we are well-placed to be able to do that, despite the competition that we have in the space today,” he added.

Shah stated that companies would apply for the license from the insurance regulator in about 2-3 months, and realistically, it will take 15 to 18 months for the joint venture to start operations.

On investment, he stated that the company’s investment in the new business would be funded via the dividend that M&M earns from Mahindra Finance.

The total capital commitment from each shareholder is up to Rs 3,600 crore (USD400 million), with each shareholder expected to invest Rs 1,250 crore (USD140 million) in the first five years.

"Mahindra brand strength, deep distribution capabilities in rural and semi-urban India and execution excellence make life insurance a logical extension towards our goal of building a comprehensive financial services portfolio," Shah stated.

Life insurance is under-penetrated today, and the company sees a tremendous opportunity in the vertical and would also evaluate getting into the general insurance segment as well, he said.

"We have started with life insurance. If the insurance regulations allow a composite license, that could be a potential upside for the JV, and that’s something we will evaluate,” he added.

Replying to a query, Shah noted that typically the break-even period for new ventures is around 10 to 12 years.

“We feel confident that we can improve on that,” he said. With a focus on leveraging technology the joint venture will build an efficient, customer-centric insurer in India, Shah said.

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

"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 added.

With JV pack inked, Mahindra and Manulife teams will work together to apply for an insurance license.

The life Insurance market has surpassed USD 20 billion in new business premiums, growing at a 12 per cent CAGR over the past five years.

Yet, India continues to have a high protection gap and low insurance penetration, providing 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, the statement stated.

This growth is underpinned by robust GDP expansion, a rising middle class, and a supportive regulatory environment, it added.

At the end of 2024, Manulife Financial Corporation had more than 37,000 employees, over 109,000 agents, and thousands of distribution partners, serving over 36 million customers across Canada, Asia, Europe and the US.

M&M shares were trading 0.47 per cent down at Rs 3,735.95 apiece on BSE. PTI MSS MSS DR DR