Reliance and Nippon Life Insurance Have Partnered
The sixth largest life insurance company in the world, Nippon Life Insurance Co, has partnered with Reliance Life Insurance Co. Ltd. which started operations back in 2005. For Reliance, a life insurer in India, this partnership is bringing capital as well as expertise and customers can expect to see product development, better customer service and cost reduction in the next few years according to the article "Reliance Life Sells Stake to Nippon Life: What it Means for You" by Deepti Bhaskaran on Live Mint.
Nippon has signed a definitive agreement to acquire a 26% stake in Reliance and some experts predict this will serve as a benchmark for the life insurance industry across the world. Ashvin Parekh of Ernst & Young and P Nandagopal managing director and CEO of IndiaFirst Life Insurance shared their expertise with CNBC on how this will affect other life insurance companies.
Nandagopal says there is a need for capital in the life insurance industry and the foreign direct investment option is available according to the article "Life Insurance Industry Needs Foreign Capital: Experts" found on MoneyControl.com. Parekh says there are ramifications of this deal stating that strategic inputs must have been part of the valuation. Nippon got a great deal with a solid partner, and Reliance now has one of the largest life insurance companies by its side. The deal seems to be in the best interest of both companies.
Parekh goes on to say that the partnership is setting a benchmark for the life insurance sector but there are strategic inputs that went into this decision. Reliance picked a great partner in Nippon, the largest life insurer in Japan, and one of the largest insurers in the world. The industry will come back eventually and it's possible this value multiple indicates this to be true.