Mahindra Finance to foray into insurance sector
Anand Mahindra owned Mahindra Finance could soon be making an entry into insurance business as well. According to sources, the non-banking finance company, Mahindra Finance is in talks with one of America's largest insurance company The Travelers Companies, for a partnership.
In the partnership for general insurance which includes health, motor and other general insurance policies, Mahindra intends to hold 74 percent, while Travelers could stick to 26 percent, which is the highest limit for foreign investors in the insurance sector. When contacted, neither of them wanted to comment on the story, but sources said that the deal might close in another 90 days.
Mahindra Finance currently holds a broking license for insurance. The company's experience in agricultural and rural finance apart from car loan financing, in addition to its presence in the insurance sector as a broker, is known to have prompted the company to enter the sector.
The parent company, Mahindra & Mahindra's presence across the automobile sector will also help the company sell motor insurance, which is the largest segment in general insurance.
Travelers Companies is a New York Stock Exchange listed company, which provides insurance for auto, home and business. The company generated revenues of approximately USD 25 billion in 2011, according to information provided on its website.
The company has operations across Canada, UK, Ireland and Brazil. It had been trying to enter India for a very longtime and had even held talks with construction major L&T three years back. L&T had later decided to venture into general insurance business all by itself.
India has 25 general insurance companies with low penetration in the Indian market; which is less than one percent, offering an opportunity for foreign companies to enter the sector.