Aviva aims to boost stake in India JV

28-Jul-2010

India Britain financeUnited KingdomDabur India Ltd.Aviva Life Insurance Company India Limited Aviva Plc, Britain's second largest insurer, wants to boost its stake in its Indian joint venture to 49 percent as soon as regulations allow, its chief executive told Reuters in an interview on Wednesday.

Speaking in Mumbai, as part of the biggest UK trade delegation in modern times, Aviva CEO Andrew Moss said he hoped the UK government would persuade India to relax its cap on foreign direct investment (FDI) in the insurance market. Aviva has a 26 percent stake -- the maximum permitted -- in a joint venture in the fast-growing Indian market with Dabur called Aviva Life Insurance Company India Limited.

"The key issue for us is that we are only allowed 26 percent of that business and the foreign direct investment cap prohibits us from holding more," Moss said, adding Aviva's had the joint venture for eight years. "We would like to see that change and move up to 49 percent as soon as we can," he said, adding he would like to see progress within a year. British Finance Minister George Osborne is expected to push the case for opening up the insurance and other financial services markets in a speech later in Mumbai.

Osborne, Moss and other CEOs then travel to Delhi to meet up with Prime Minister David Cameron and a host of other ministers and business leaders as Britain's coalition government works to create a new special trading relationship with India. Moss said India is important to Aviva's Asian franchise. "We are doing well in that market (India), but the business does require more capital invested in it and this change will facilitate that," he said.

"There are a number of domestic and foreign players in the Indian market which, of course, is natural when you have a young market, it is a long-term play -- the Indian life insurance market -- but there is a great deal of foreign interest in it." The CEO also wants to see greater clarity on regulation. "I think the other short-term issue we face is that regulation in the Indian market has been unpredictable and this has made it difficult ... to plan properly."

Turning to Britain, Moss said he had been encouraged by the approach taken so far by the new coalition government, which took power in May, but also wanted them to address the longer-term challenges in the economy. "We all understand the short-term priorities are around decreasing the budget deficit but, in time, I see a debate emerging about promoting long-term savings in the UK which will require incentivisation from the government," he said.

Source : www.insuremagic.com