Jio Financial Services is in talks with Allianz SE to Bring in Joint Ventures for Insurance into India

Mukesh Ambani-backed Jio Financial Services Ltd is in talks with Allianz SE to form joint ventures in India’s insurance market, said people familiar with the matter. The German life and health insurer are discussing its plan to exit the existing collaborations with Bajaj Finserv Ltd, said the sources. 

Discussions between Jio Financial and Allianz would focus on setting up general as well as life insurance companies in the Indian market. However, the talks are in their infancy stage and there is a probability that the parties may opt against the tie-up. 

Bajaj Finserv said in a statement issued on Tuesday that Allianz had indicated it wanted to explore an exit from the existing ventures. The company, meanwhile, has pointed out Allianz commitment to the Indian insurance market even as it tones down internal disputes related to the strategic direction of the partnership. 

A spokesman for Jio Financial declined comment on the current talks, saying only: “If and when there are any material developments with respect to the company, we will continue to make necessary disclosures in accordance with our obligations, as we always have.” Allianz’s spokesman also declined to comment on speculation over the future. 

The company led by veteran banker K.V. Kamath has already had a shadow banking service and insurance brokerage, and partnered with BlackRock Inc. to set up an asset management business. The proposed new insurance operations would greatly advance the goal for Jio Financial to be a big player in the financial services sector. 

Current data from the insurance regulator indicates that the country’s penetration in the insurance sector, measured as the ratio of premiums to gross domestic product, stands at an especially low level compared with countries like South Africa and Canada. This means a significant growth opportunity for the sector-the basis for the timing of setting up new ventures in the insurance sector. 

This might bring an important change in the role that the two companies are likely to play as they confront the changing financial services environment of India. Following this potential partnership between Jio Financial and Allianz, market observers could start watching closely for any changes this might bring into the competitive landscape of the Indian insurance market.