The Hindu Business Line : Universal Sompo plans Rs 238-cr capital outlay

Mumbai, Nov. 30 Universal Sompo, the general insurance venture promoted by Indian banks and a Japanese partner, will kick-off its operations with an initial capital outlay of Rs 238 crore.

The company plans to focus on health, motor, householder, and shopkeeper insurance, and will mainly use bank branches as the primary distribution channel.

Univeral Sompo General Insurance is a joint venture between Allahabad Bank (30 per cent), Indian Overseas Bank (19 per cent), Karnataka Bank (15 per cent), Dabur (10 per cent), and Japan-based Sompo (26 per cent).

Mr O.N. Singh, Chairman, Universal Sompo General Insurance, said that the company will begin with a paid-up capital of Rs 150 crore while the rest would be a share premium which would be used for creating the company’s infrastructure. “We hope to have a soft-launch by the end of December or early January,” Mr Singh said.

Mr Singh said that while the local partners’ 74 per cent stake had been issued at par, Sompo’s stake of 26 per cent was issued at a premium of Rs 32 per share. So, while Sompo has invested Rs 117 crore in the venture, the local partners have chipped in Rs 121 crore.

Foreign investors have had to pay a premium for their investments in insurance companies, as the local banks bring with them a vast distribution network in the form of bank branches. Allahabad Bank, Indian Overseas Bank, and Karnataka Bank together have 4,000 branches.

Product designing

Mr Singh said that the capitalisation of the company was complete and the designing of products was underway. “We plan to launch with 26 products that will cover all the segments including motor, health, personal accident, property, liability, marine and cargo insurance,” he said.

The company has picked a particularly sensitive time to launch in the country, since the free-price regime has been eating away at the bottom line of non-life insurance companies.

Retailing

Ms Rachna Sethi, Chief Operating Officer, Universal Sompo, added that the company hoped to rake in 70 per cent of its business from the sale of retail products that can be sold through the bank’s branches.

Currently, Allahabad Bank sells non-life policies for National Insurance while IOB and Karnataka Bank sell for United India and Bajaj Allianz General Insurance, respectively.