Insurance Australia Group (IAG) and State Bank of India (SBI) have entered into exclusive negotiations to form a general insurance joint venture in India later this year.
While the terms of the partnership are yet to be finalised, the joint venture is expected to begin writing business in 2009 once a binding agreement has been signed and approvals granted.
IAG chief executive Michael Hawker said forming a general insurance partnership with SBI, the largest bank in India, was a significant step in IAG's Asian expansion strategy.
"We identified India four years ago as a market we wanted to enter as part of our strategy to diversify into fast-growing general insurance markets in Asia," Hawker said.
"India's general insurance sector has grown at a compound annual growth rate of 14 per cent over the last five years and is predicted to grow 15-20 per cent per annum over the next 10 years."
SBI is the leader in the Indian banking sector with more than 100 million customers and over 10,000 branches across the country. IAG had been discussing opportunities with SBI for more than 18 months, Hawker said.
Establishing a general insurance partnership was a key element of SBI's strategy to pursue emerging high-growth opportunities, SBI deputy managing director Deepak Chawla said.
"IAG's proven capabilities in technical and underwriting expertise, pricing and risk management and its track record in working successfully with other partners in the Asian region makes IAG an ideal partner," Chawla said.
"We look forward to working together to grow a successful general insurance business."
