In order to acquire Reliance Capital's share in Reliance Nippon Life Insurance Company, Nippon Life Insurance has contacted the administrator of the financially troubled Reliance Capital.
According to sources with knowledge of the situation, Nippon Life would prefer that Reliance Nippon Life not be merged with another company.
Reliance Capital and Nippon Life have a 51:49 joint venture called Reliance Nippon Life Insurance. Aditya Birla Capital has been awarded approval by the debt-ridden Reliance Capital's creditors to buy the latter's 51% holding in Reliance Nippon Life.
Two insurance firms, Aditya Birla Health Insurance and Aditya Birla Sun Life Insurance, are promoted by Aditya Birla Capital. These firms are a 51:49 joint venture between the Aditya Birla Group and Sun Life Financial of Canada.
According to IRDAI regulations, no one organization is permitted to own more than 10% of two insurance businesses. This indicates that, should Aditya Birla Capital's acquisition bid for Reliance Nippon Life Insurance be accepted, the latter would probably merge with Aditya Birla Sun Life Insurance, which Nippon Life Insurance opposes.
Due to the involvement of the third partner, Sun Life Financial, in the merger, Nippon Life's stake will be reduced. According to sources, Nippon Life's ownership portion in the combined company might drop as low as 15%.
Nippon Life stated in a statement to the administrator that it had no intention of selling its 49% ownership or of seeing the joint venture merge with another life insurance firm. "We want to bring in a strategic partner with whom we can conduct business for the long run."
0 Comments