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TATA to Buy AIG in life insurance JV

Posted in insurance by kishosingh on August 6, 2009

There is the biggest news in insurance sector. TATA is to buy AIG in life insurance JV. Tata has planned to buy out AIG which is US insurer from the life JV, TATA AIG Life insurance. We have already published an analysis of life insurance industry in the comparison of AIG. According to our analysis AIG is facing crisis in the USA. About the loss of AIG we write in our previous post, banking and insurance sector loss,

“AIG’s loss amounts to 92 per cent of the $67.4 billion that Americans spent at world’s largest retailer Wal-Mart Stores Inc. in the fourth quarter, which includes the holiday season. It would take a person spending $1 million per day, everyday, the next 169 years to spend as much money as AIG lost during the fourth quarter, which lasted just 92 days.”

About the deal ET writes,

“Initially, there were indications that AIG would sell its Asian life insurance business. Earlier this year, US’ Metlife, UK’s Prudential and French insurer Axa had shown interest in buying parts of AIG’s life insurance business. But this could have caused regulatory problems in India, as all three multinationals have a presence here through JVs.”

It means not only TATA but also there are many insurance companies who are trying to take a chance to buy some share of AIG.

There is another thing which has made TATA to buy AIG that is global economic slowdown. These days AIG is suffered from huge loss in the USA. You should know that the USA government has bought maximum shares of AIG to get from crisis but still the insurance company facing more problems to survive globally.

Another thing which is also most important, US government has decided to sell shares by its Asian business under AIA. You should know that AIA is an arm of AIG, a public offer.

TATA spokesperson doesn’t want to comment at all on this situation, “We do not wish to comment on such speculation.” It is the truth that AIG was able to infuse money into the Indian life insurance JV despite of, crisis.

AIG plans to invest in non-life business also that could be strong position for that company. TATA is still in confusion to choose it’s a reliable partner.