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Radhika Menon

Mumbai, Aug. 22 Star Union Dai-ichi, the proposed new insurance venture promoted by Bank of India, Dai-ichi and Union Bank, will begin operations with a capital base of Rs 250 crore, which will be hiked to Rs 450-500 crore in the next five years.

The new company, which hopes to receive its licence in the next two months, will focus mainly on bancassurance for distributing its products. Bank of India has a 51 per cent stake in the new company, while Dai-ichi and Union Bank hold 26 per cent and 23 per cent respectively.

“We will receive our R1 license shortly and expect to get all the clearances from IRDA in two months. We will begin with a capital base of Rs 250 crore and based on our solvency requirements hike it to around Rs 450-500 crore in the next 5 years,” Mr Kamalji Sahay, CEO, Star Union Dai-ichi Life Insurance, told Business Line.

Mr Sahay was earlier Executive Director (Personnel), at LIC. Setting up an insurance company is not an entirely new experience for Mr Sahay. In 2001, he was deputed to set up LIC’s joint venture in Nepal. “The Nepal joint venture broke even in two years,” Mr Sahay said.

Although the CEO is not guessing when Star Union Dai-ichi will break even, the focus of this venture will be on controlling costs. Star Union Dai-ichi takes its cue from another bank-led insurance company — SBI Life, in whose case bancassurance aided an early break-even.

“We will focus on bancassurance for two years and then go in for a more composite model by bringing in an agency force. We want to keep our costs under control and focus on increasing our investment income,” said Mr Sahay.

Bank of India, Union Bank of India together bring access to 5,211 branches in addition to 1,200 branches of Regional Rural Banks. So far, Bank of India has been selling ICICI Prudential Life’s policies and Union Bank has been distributing HDFC Standard Life’s policies. After the launch of Star Union Dai-ichi, both Bank of India and Union Bank will become corporate agents of the new entity.

More Stories on : Alliances & Joint Ventures | Insurance

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