HSBC likely to become the second foreign company to exit from Indian insurance market as it is evaluating possible ways to exit from its Indian insurance joint venture.Earlier this New York Life sold its entire stake in Max New York Life to Mitsui Sumitomo.
HSBC which does not run any insurance company anywhere in the world, has three-way joint venture in India called Canara HSBC Oriental Bank of Commerce Life Insurance Company. In this joint venture Canara bank and Oriental Bank of Commerce (OBC) together hold 74% stake and HSBC holds remaining 26% stake.
Global insurance companies are exiting Indian market partly due to problems in home markets and partly due to delay in increasing Foreign Direct Investment (FDI) cap in insurance sector. Global insurers are waiting that FDI cap should be raised to 49 % from current 26%. These woes coupled with falling growth rate due to change in regulations on Unit-Linked Insurance Plan (ULIPs) have forced companies to revisit their strategies.
In March this year, HSBC has sold its general insurance business to Axa group of France and QBE insurance group of Australia for $914 million in cash.HSBC has decided to divest its non-core assets such as life insurance, general insurance and consumer finance across the world and focus on its core banking business as a part of its global cost-cutting strategy.
Canara HSBC OBC life launched its operations in June 2008. Currently it has paid up capital of Rs 925 crore. As of 31 March 2012 Company’s total assets under management stood at Rs 4,289 crore.It operates on the bancassurance model and sells products through 989 branches of three banks.
HSBC which does not run any insurance company anywhere in the world, has three-way joint venture in India called Canara HSBC Oriental Bank of Commerce Life Insurance Company. In this joint venture Canara bank and Oriental Bank of Commerce (OBC) together hold 74% stake and HSBC holds remaining 26% stake.
Global insurance companies are exiting Indian market partly due to problems in home markets and partly due to delay in increasing Foreign Direct Investment (FDI) cap in insurance sector. Global insurers are waiting that FDI cap should be raised to 49 % from current 26%. These woes coupled with falling growth rate due to change in regulations on Unit-Linked Insurance Plan (ULIPs) have forced companies to revisit their strategies.
In March this year, HSBC has sold its general insurance business to Axa group of France and QBE insurance group of Australia for $914 million in cash.HSBC has decided to divest its non-core assets such as life insurance, general insurance and consumer finance across the world and focus on its core banking business as a part of its global cost-cutting strategy.
Canara HSBC OBC life launched its operations in June 2008. Currently it has paid up capital of Rs 925 crore. As of 31 March 2012 Company’s total assets under management stood at Rs 4,289 crore.It operates on the bancassurance model and sells products through 989 branches of three banks.
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