If you have taken a insurance cover from Tata AIG Insurance, you do not have to worry. Existing stringent insurance laws will ensure long-term sustainability of your cover.
“Indian insurance laws are stringent,” said R Krishnamurthy, MD, Watson & Wyatt Insurance Consulting. “Your insurance is ring-fenced by the government, there is nothing to fear on that side.”
However, changes will only happen if AIG’s insurance business worldwide is sold and the Tatas do not want to continue with the prospective buyer. While Tatas hold 74 per cent in the joint venture, AIG holds the rest.
The situation seems to be a little risky for those who hold any of AIG’s 54 mutual fund products. If key professionals who manage the fund decide to move on due to the global crisis facing the parent company, it would harm the prospects of the funds. AIG has close to Rs 3500 crore in Assets Under Management. An AIG spokesperson declined to comment.
“Funds are only as good as the fund manager,” said a frontline fund adviser with a leading Mumbai brokerage on condition of
anonymity, indicating that there could be an exodus of managers from the stricken companies.
DSP Merrill Lynch (DSPML), which manages Rs 19,415 crore worth of assets, is unlikely to be badly affected. Bank of America (BoA) said Wednesday that its $50-billion (Rs 2,30,000 crore) acquisition of Merrill Lynch would provide it with significant growth opportunities in India.
BoA would retain Merrill Lynch’s brand name for the institutional broking business. ML has been involved in several big budget institutional broking deals, sources close to DSPML said.