Aviva set to become first foreign insurer to fully own India life business

UK-based Aviva Plc is set to become the first overseas life insurer to fully own its local business after agreeing to buy the remaining 26% stake in Aviva Life Insurance Co India from its joint venture partner, Dabur Invest Corp, just weeks after New Delhi allowed total foreign ownership in the sector, people familiar with the proposed transaction told ET.

The transaction, which is in advanced stages of discussion, would mark the first deal under the government's liberalised foreign ownership policy announced earlier this year and notified in May. Financial details of the deal, including a likely control premium to be paid by the acquirer, could not be immediately ascertained.

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Total ownership would help the British parent focus on business expansion in one of the world's least-insured nations, giving it sufficient incentive to allocate growth capital to a sector that continues to be dominated by state-run Life Insurance Corp nearly three decades after deregulation.

"The company was not really growing. It was largely managing its solvency position," said a source familiar with the matter. "Full ownership should provide greater strategic flexibility and enable faster decision-making."

New Delhi has further eased FDI norms, providing sufficient incentive to potential insurance JV partners to raise their equity commitments in the Indian market. Insurance, particularly the segment that provides mortality covers, is often described the world over as the conduit of patient capital into productive sectors that demand predictable and long-term funding.

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Aviva's acquisition of the residual stake will end Dabur's more than two-decade association with the insurer, which has continued to maintain solvency comfortably above the mandated regulatory thresholds.

An Aviva spokesperson said the company was reviewing ET's queries internally but could not provide a response before the publication of this report.

Aviva has been present in India since 2000 through its joint venture with Dabur Invest Corp. Over the past few years, the UK insurer has steadily increased its commitment to the business, raising its stake from 49% to 74% in 2022 by acquiring an additional 25% from its Indian partner.

MAINTENANCE MODE

Aviva India was incorporated almost immediately after India unshackled its insurance industry for private ownership as part of a broader deregulation of its financial sector. This involved allowing calibrated overseas ownership of companies offering both life and general insurance services.

As of March 31, 2026, Aviva managed assets of about Rs 16,316 crore and reported premium of Rs 1,343 crore for FY26, up 2.8% from the previous year. Total new business premium grew 10% to Rs 351 crore.

Profit after tax, however, declined 21.7% year-on-year to Rs 84.15 crore. The insurer's solvency ratio stood at 188%, comfortably above the regulatory requirement of 150%, while shareholders' funds were Rs 878 crore.

Despite maintaining adequate capital, the insurer has struggled to scale its business over the years. This is mainly due to limited distribution of 93 branches in an industry that is dominated by bancassurance tie-ups.