19 May 2005
Sanlam enters the Indian insurance market
Sanlam announced today that it had entered into a joint venture agreement with the Shriram Group to form a new life insurance business, the Shriram Life Insurance Company Limited based in India. Sanlam and the Shriram Group will hold 26% and 74% share of the company respectively.
Sanlam's group chief executive, Dr Johan van Zyl, said that the transaction is in line with Sanlam's strategy for the development of its international business.
"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. In this process we try and identify suitable partners for such joint ventures and we will continue to investigate other opportunities," he said.
The joint venture with Shriram in India follows Sanlam's earlier international expansion with the acquisition of Merchant Investors Assurance in the United Kingdom in 2003.
The Shriram Life Insurance Company will be developing, selling and administering long term insurance products and supporting asset management services in the Indian market. Sanlam will provide product development, administration and sales training skills and the Shriram Group will provide a leading brand, a strong track record in marketing financial products and an extensive distribution network.
Both Sanlam and the Shriram Group believe that the insurance market in India has significant growth potential. The penetration of life insurance in India is extremely low as compared to other developing countries, with over 80% of the insurable population not being covered and penetration as a measure of GDP amounting to a very low 2,3%. The entry of private players into the market since 2000 has resulted in rapid growth in the sector, which is expected to continue.
Commenting on the joint venture Lize Lambrechts, CEO of Sanlam Life said, "Sanlam and Shriram complement each other and this joint venture forms part of Sanlam's strategy to explore international opportunities that create sustainable profit growth over time. This is an excellent opportunity for Sanlam to tap into the high growth Indian market. 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.
Mr R. Thyagarajan, Chairman of Shriram Group, said "The Shriram Group has the appropriate skills and distribution infrastructure in place to sell insurance products. We plan to leverage our extensive countrywide distribution network of over 600 branches and 65 000 agents together with Sanlam's experience and expertise in the life insurance sector to offer innovative products to a wide cross section of people."
Final regulatory approvals are awaited in India, and it is expected that operations will commence August 2005.
Sanlam did not disclose the amount of its initial investment in the joint venture but said that it is not material. It will fund its shareholding in the joint venture through cash.
Shriram GroupThe Shriram Group, established in 1974, is among the leading corporate houses in Southern India and a major player in the Indian financial services sector. The Group is the leader in the chit fund and the truck financing business. The Group manages funds of about R11 billion in its truck financing business and has a significant presence in consumer durable financing, insurance broking and stock broking businesses as well. With a network of over 600 branches spread over urban as well as semi-urban and rural areas and an experienced sales force of over 65 000 agents, Shriram Group has one of the widest private company distribution networks that reaches over 3 million clients in India.
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