Videocon (VIDEOIND.NS : 218.6 +2.45
), the flagship company of Videocon group and Liberty Mutual group, a Boston-based global property & casualty insurance major, are planning to form a joint venture to foray into non-life insurance sector.
Under the proposed agreement, Liberty Mutual Group through a subsidiary will initially pick up 26% stake in the Indian JV and may raise it to 49% when the regulations permit. Venugopal N Dhoot, CMD, Videocon Industries said, "The company has a strong presence in Indian consumer space ranging from white and brown goods to mobile telecom services covering entire geography of India. Domain expertise of Liberty Mutual Group coupled with our huge platform of brand, trade and customer relationships will provide a robust business model to our general insurance business."
However, Venugopal said the company has no other plans to enter into no other segments of Indian financial sector.Earlier, Liberty Mutual had a tie up with Dabur (DABUR.NS : 96.15 -1.4
) group for entering into general insurance sector, but couldn't progress due to regulatory hurdles. Making an announcement about the proposed JV in Mumbai on Wednesday, David H Long, president, Liberty Mutual group said, "We are ending our earlier JV with Dabur group. We expect our new JV to be formed in a week and start operations after a year. We are targeting a premium of $ 50 million in the the first year. We are projecting a premium of $ 300 million over a period of five years." To begin with, the JV will have its capital base of Rs 300 crore which will be sufficient to take care of the financial requirements of the company for the first five years.
Long said that the JV would infuse another capital of $40 million afterwards and has a break-even target within five years.
Both the companies will sign the joint venture agreement and apply to Insurance Regulatory & Development Authority (IRDA) for a license soon , said Long .
The Videocon and Liberty Mutual JV will be initially focus on motor, health insurance, home insurance and small enterprises insurance, he said.
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