Joint venture between BoB, Andhra Bank and UK’s Legal and General.
Mumbai, Nov. 9 IndiaFirst Life Insurance Company, a joint venture between Bank of Baroda, Andhra Bank and UK-based Legal and General, will launch its operations from December.
“The company has received its R3 licence and is currently getting its products approved from the insurance regulator. By December, we will start selling our products,” said Dr P. Nandagopal, CEO of IndiaFirst, at a press meet here on Monday.
The company has a paid-up capital of Rs 200 crore. While Bank of Baroda has a 44 per cent stake in the joint venture, Andhra Bank holds 30 per cent, and the remaining 26 per cent stake is with Legal and General.
The company will require around Rs 2,500 crore in the next 10 years.
The company has filed four products — pure ULIP savings plan, education plan, retirement plan and annuity plan —for approval with IRDA.
The company is planning to stick to the bancassurance model in the first year of its operation.
“We will explore the agency model after completion of one year of operations. We will leverage the two banks’ 4,500-strong branch network and serve customers of both the banks,” Mr Nandagopal.
However, in the initial phases, only 1,150 branches of both the banks will be mobilised to sell the products.
While Bank of Baroda has already severed its bancassurance tie-up with HDFC Standard Life this month, Andhra Bank is still in talks with Life Insurance Corporation to end the arrangement.
“We will be severing our relationship with LIC shortly. There are some issues that have to be sorted out. However, we will severe the relationship before the launch of our company’s operations,” said Mr R.S. Reddy, Chairman and Managing Director, Andhra Bank.
Andhra Bank will lose out on trail commissions if it stops selling LIC’s products before March 2010. Distributors get trail commission for policies which have been sold earlier but on which premiums are still being paid. However, if Andhra Bank ends its relationship with LIC before March 2010 (before the completion of five years) it will lose out on the trail commission.
“We are in talks with LIC and IRDA so that we don’t lose out on that income. But, we will sell our company’s products from the launch date,” said Mr Reddy.
Mr Gareth Hoskin, Group International Director, Legal and General, said the UK-based company is exploring entering the asset management space in India.