Videocon, Liberty to form insurance JV

Videocon, Liberty to form insurance जव

Mumbai: Mumbai-based Videocon Industries is set to enter the financial services sector by forming a non-life insurance joint venture with Liberty Mutual Group based in Boston, Massachusetts. Videocon, the flagship of the $5-billion Videocon Group, will hold 74% stake in the venture while the rest will be held by Liberty, a global property and casualty insurer which had revenues over $31 billion in 2009. Industry sources told FE that David H Long, president, Liberty Mutual Group and Venugopal Dhoot, chairman and managing director, Videocon Industries are expected to sign a letter of intent to this effect soon.

Under the proposed agreement, Liberty Mutual, through a subsidiary, will initially hold 26% stake in the new company and Videocon will hold 74%. Liberty will also have the option to raise its stake in the JV in line with the regulatory guidelines on foreign direct investment. When contacted, Videocon’s Dhoot refused to comment on...he development.

The venture will focus on insurance for households – cars, homes, health, personal accident – besides small and medium-sized commercial enterprises. The JV will offer personal and commercial insurance products through several distribution channels. Videocon and Liberty plan to initiate the licensing application process for the new company before the end of the year.

After securing regulatory approvals, the company will start providing multi-line insurance underwriting capabilities to various distribution channels, with an emphasis on personal insurance products such as motor, health, home and personal accident protection.

Videocon has interests in consumer electronics, household appliances, oil and gas, power generation, retail, DTH and telecom businesses. The company is expected to leverage on its strong presence in consumer space. Liberty Mutual Group, meanwhile, will bring in its domain expertise. The new venture will aim to tap the expanding middle class in the country's growing economy, where more Indians will buy...insurance to protect possessions.

Liberty Mutual Group is a diversified global insurer and the fifth largest property and casualty insurer in the US, based on 2009 direct written premium. The company ranks 71 on the Fortune 500 list of largest corporations in the US, based on 2009 revenue. As of December 31, 2009, Liberty had $109.5 billion in consolidated assets, $95.0 billion in consolidated liabilities, and $31.1 billion in annual consolidated revenue.