BoB finalises Germany’s ERGO as its life insurance partner

MUMBAI: Bank of Baroda (BoB) has finalised its life insurance JV partner and is expected to make an announcement soon. According to sources, the bank has shortlisted German insurer ERGO of the Munich Re group and UK insurer Legal and General.

Although BoB has been planning an insurance JV for several years, its plans had not taken off as the bank was keen to have a 74% subsidiary. However, the central bank was willing to allow banks hold less than 50% in any insurance JV. BoB had sought a special dispensation in line with SBI which was given special permission to hold up to 74% in SBI Life — a JV with Cardif of France.

Incidentally, all other bank JVs until now have seen the main promoter bank holding around 50%. The last bank to announce an insurance venture was Canara Bank, which said that it will hold 51% in a JV with HSBC and OBC where OBC would hold 23%. Earlier, IDBI Bank had announced a JV with another European insurer Fortis where IDBI Bank would hold 48% and Federal Bank and Fortis would hold 26% each.

With total premiums of euro 16.7 billion, the ERGO Insurance Group is a leading European insurer and No 2 in the German primary insurance market. The group has close to 30 million customers in 23 countries. In October, the company had issued a statement indicating that it was on the look out for a JV partner for the life and non-life business in India.

ERGO has already established its presence in India through a health insurance partnership with Apollo. Apollo has joined hands with DKV International Health Holdings, ERGO’s healthcare brand. DKV is a part of the ERGO group. Legal & General is one of Britain’s top 50 FTSE companies. The group has over 5.6 million customers and employ over 8,800 staff. The Legal & General Group has investments of over £211 billion worldwide (as at 30 June 2006) on behalf of investors, policyholders and institutions.