Date:01/08/2005 URL: http://www.thehindubusinessline.com/2005/08/01/stories/2005080102070100.htm

Back Reliance Life buys AMP Sanmar

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Chennai/Mumbai , July 31

THE Chennai-based Sanmar group today announced the sale of its interests in AMP Sanmar Life Insurance Company to Reliance Life Insurance, a subsidiary of Reliance Capital Ltd (RCL).

An official statement from Reliance Life Insurance said: "The proposed acquisition will mark the immediate entry of RCL into the exciting growth area of life insurance in one of the world's fastest growing and most under-served markets."

RCL already has a subsidiary, Reliance General Insurance Co Ltd, which is present in the non-life insurance business.

AMP Sanmar Life Insurance Company is a joint venture of AMP, Australia and the Sanmar group.

Headquartered in Chennai, it has over 90 offices across the country, 9,000 agents, and more than 900 employees.

The decision to sell the company was taken consequent to AMP's intention to exit the insurance business in India.

The consideration for the deal has not been disclosed.

Asked about this, the Sanmar group Chairman, Mr N. Sankar, told Business Line that AMP had requested to keep the consideration confidential because of regulatory requirements in Australia. (AMP is a listed company in Australia.)

He added that Sanmar's stake in AMP Sanmar Life was through two investment companies of the group, which in turn are wholly owned subsidiaries of the group holding company, Sanmar Holdings Ltd.

A Sanmar release said that the group had "agreed to co-operate with AMP in selling its interests in the venture."

About this, Mr Sankar said that the Sanmar group had been open to a buyer buying only AMP's stake or the entire equity of the company.

On deploying the funds that come in, Mr Sankar said that group had no plans for any new venture.

"We have four businesses - chemicals, plastics, shipping, and engineering," he said, adding that all the four were growing.

Industry observers said that buying a licence-holding life insurance company makes sense for Reliance because its registration with the IRDA lapsed, as it did not start its business within three years of registration.

It is understood that Reliance Capital has applied afresh for a registration.

Taking over AMP Sanmar Life will get Reliance Life a readymade infrastructure and a portfolio.

In 2003-04, AMP Sanmar issued 46,000 policies and earned premium income of Rs 28 crore.

In 2004-05, the company issued 35,000 policies but earned a premium income of Rs 91 crore.

AMP Sanmar has a capital base of Rs 217 crore and is present in about 80 cities.