According to recent industry speculations, Mukesh Ambani-led Reliance Group is in talks to buy out Bharti from Bharti AXA Life Insurance Company.
Bharti AXA Life Insurance Company which started in 2006, is a joint venture between India’s Bharti Enterprises (74%) which already has a strong presence in telecom, retail, etc, and Paris-headquartered AXA Group (26%).
Reliance is understood to be in talks with Bharti which has been looking for an exit for some time now. As per media reports, an insider from Reliance said that the company has been keen to make its foray into insurance and has been in talks with a few companies, however, they are yet to finalize a partner.
The spokesperson from Bharti however has declined to comment, brushing it aside as a rumor.
Bharti AXA Life Insurance has been struggling this year and the company’s new business premium collection has dropped to Rs 362.4 crores during FY 2010-11 as against Rs 437.67 crores in the previous year. This has resulted in a 17% dip in its new business premium earnings over that in the previous year.
Most life insurance firms have taken a hit last year as a result of the new guidelines on Unit-linked insurance plans or Ulip. Earlier Ulips contributed to a major chunk of the life insurance business. Post introduction of the new norms, life insurance companies had to introduce new customer-friendly Ulips and cut down on deductions and agents’ commissions. Owing to these restrictions, there was a steep fall in Ulip sales which is reflected in the business figures of all private life insurers.
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