Nippon Life would invest US$680mn or Rs. 30.62bn in Reliance Life Insurance, valuing the company at US$2.6bn. Shares of Reliance Capital jumped, extending last week's gains following the announcement.
The shares of Reliance Capital were up at Rs. 542 or 5.8% over the previous close. The scrip rose by Rs. 29.
It had earlier touched a day's high of Rs. 543 and opened at the day's low of Rs. 513.
According to reports, Reliance Life had been in talks with Swiss Life and China Life, but those negotiations failed to bear fruit due to unspecified reasons.
The transaction is subject to necessary regulatory approvals. This transaction pegs the total valuation of Reliance Life Insurance at approximately Rs. 115bn (US$ 2.6 billion).
Nippon Life is a 121-year-old Global Fortune 100 company, 6th largest life insurer in the world, and the No.1 private life insurer in Asia and Japan.
Commenting on the development, Anil D. Ambani, Chairman, Reliance Capital stated, "At this time, our thoughts are with the people of Japan, bravely facing an unprecedented natural catastrophe. We pray for strength to the country, its people and our new partners in the entire Nippon Life family, to overcome the trauma of the tragic loss of life and devastation caused by this calamity."
Sam Ghosh, CEO, Reliance Capital said "Nippon Life is the largest life insurer in Japan and has been in operations for the last 121 years making them one of the oldest insurance companies in Japan. As a strategic partner, Nippon Life will bring vast experience, expertise and global best practices - in-areas of product development, underwriting, investment management, distribution, customer relationship management and risk management. This partnership will accelerate Reliance Life Insurance's vision of becoming a world class insurance company in India".
"We are delighted to partner with Reliance Life Insurance - an extremely competitive company with unique service offerings, strong operations, nationwide distribution network, highly talented executives and strong brand recognition throughout India. We both share the same passion and philosophy and, together, we believe we can develop a strategic partnership to help Reliance Life Insurance become a world class insurance company in India", said Mr. Kunie Okamoto, President, Nippon Life Insurance.
Nippon Life Insurance posted revenues of Rs. 3,24,000 crore {US$ 72 billion) and a profit of Rs. 11,700 crore (US$ 2.6 billion) for the fiscal year ended March 31, 2010. The company sold around 1.4 million policies taking the total number of policies in force to over 14.7 million during the same period. In addition to selling life insurance products, Nippon Life Insurance offers various products, including defined contribution pension plans and medical coverage plans. The company celebrated its 120th anniversary in July 2009,
Reliance Life Insurance, a part of Reliance Capital, started operations in 2005, after the acquisition of a life insurance company. Reliance Life is the largest insurer in number of individual policies sold, amongst the 22 private life insurers in India. The company has sold over 7 million policies through its network of nearly 1,250 offices and over 2,15,000 advisors-Reliance Life manages assets of over Rs. 17,000 crore (US$ 3.7 billion) as of December 31, 2010.
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