Mahindra, Manulife to form 50:50 life insurance joint venture; M&M sees strong rural opportunity

The proposed JV, which is subject to regulatory approval, aims to become the "No. 1 life insurer for rural and semi-urban India" while building a strong protection-led franchise in urban markets, the company said.

Announcing the agreement, Mahindra Group CEO and Managing Director Anish Shah said, "Mahindra brand strength, deep distribution capabilities in rural and semi-urban India and execution excellence make life insurance a logical extension towards our goal of building a comprehensive financial services portfolio. Manulife is the best natural partner for us given their global capabilities in insurance products, underwriting and reinsurance... We are confident that this joint venture offers a very compelling opportunity to create meaningful value for our shareholders."

Phil Witherington, President and CEO, Manulife said, "Today marks an important milestone as we seek to enter one of the world's fastest growing insurance markets - India. This will further strengthen our diverse portfolio and positions us for tremendous growth in a mega economy of the future."

According to the company's analyst call presentation dated November 13, M&M expects to invest about Rs 250 crore per year for the first five years, forming roughly one-third of the dividend it receives from Mahindra Finance. The total capital requirement outlined for the JV is Rs3,600 crore over 10 years.

The analyst call presentation projects a long-term valuation potential of Rs18,000-30,000 crore for the venture over a decade, with M&M stating that the business will be accretive to Mahindra Finance's return on assets (ROA).

Highlighting India's strong insurance under-penetration, analyst presentation notes that rural areas, representing 65 per cent of the population and 45 per cent of GDP, have only 2 per cent of India's life insurance branches, pointing to a large access gap. Rising disposable incomes, a growing middle class, and low protection coverage are expected to drive long-term growth.

The JV plans a sharp focus on protection-led offerings, supported by Mahindra Finance's network of over 1,345 branches, coverage across 5 lakh villages and over 8,000 towns, and access to more than 25 lakh live customers, which the company said provides a strong base for premium generation.

Manulife brings to the partnership a strong track record in running high-quality agency channels across Asia and global capabilities in underwriting and reinsurance. The analyst presentation cites Manulife's USD1.1 trillion in AUM and a customer base of 36 million worldwide.

The JV will adopt a "digital-enabled ecosystem" with direct-to-consumer and online-to-offline models to drive efficiency in sales, servicing, and customer engagement.

This is the second collaboration between the companies, following the launch of Mahindra Manulife Investment Management in 2020. Both sides will now begin the process of applying for an insurance licence. (ANI)