Videocon forays into gen insurance; to ink JV pact with LMG

The foreign partner will hold a maximum permissible 26 per cent stake in the JV with Videocon owning the majority stake. An agreement is expected to be signed between the partners soon.

The partners will be infusing USD 67 million as the initial capital for the company which will go up till USD 100 million after five years, by which time they expect to break even by collecting a premium of USD 300-million.

The JV will primarily focus on personal non-life products like motor, health, homes and small commercial business solutions, LMG's President David H Long told reporters here.

The company will be applying for necessary licences from the regulator by December and hopes to go operational after September 2011, Long said. This is LMG's second shot to enter the lucrative Indian insurance sector, Long said, adding the firm's two-year-old tie-up with FMCG major Dabur for general insurance did not progress due to myriad reasons like the global slowdown.

"We have not yet dissolved the agreement, however, it could not work out due to slowdown and time was not right. So we agreed to part ways," Long said, adding de-tariffing is a big booster for entering Indian market now.

LMG is a USD 30-billion company present in about 26 countries and is confident that Videocon's distribution strengths will help it gain good market share, the JV's Chief Executive Roopam Asthana said.

"We are entering into a new field, however, it is not a diversification as it is also related with consumers," Videocon Chairman Venugopal N Dhoot told reporters here.

The JV will initially operate from 12 cities, a mix of Tier I & II, and will start hiring people as the activities grow, Asthana said.