RIL to buy out Bharti in Bharati Axa life

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RIL to buy out Bharti in Bharati Axa life
Reliance group is in talks with the Mittals to buy out Bharti in the life insurance firm Bharti Axa Life, taking its first step towards the insurance sector. Mittal's have been looking for an exit for the past one year.

Commenting on the issue, a Reliance insider said, "The group is indeed keen to enter insurance and has been approached by two to three companies, but is yet to finalize a partner." A month ago, Reliance Industries, the country's largest private sector company, announced a financial services joint venture with New York-based DE Shaw.

Bharti Axa Life is a joint venture between Bharti, which controls 74 per cent equity and AXA, the world leader in wealth management and financial protection, which owns 26 per cent stake in the company.

Bharti AXA Life is one of the struggling players in the insurance industry with a market share of 1.1 per cent and the company's new business premium income has dropped 17 per cent to Rs 364 crore in 2010-11.

The life insurance industry has grown drastically in recent years because unlike general insurance where the key element is risk, the life insurance business is a combination of savings and risk.

According to a senior official of an insurance company, "For a group taking up insurance business, traditional products like endowment are equally alluring with their higher margins."

It's perceived that the group with huge cash flows will build businesses like non-banking financial services, insurance and asset management where entry barriers are low compared to banking.

Read more about: ril, bharti, insurance, investment
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