Burman family, Liberty Mutual insurance JV hits IRDA glitch
The non-life insurance joint venture between the Burman family of the Dabur group and Boston-headquartered Liberty Mutual has hit a roadblock with the industry regulator raising questions about the same group of promoters having stakes in two insurance companies. Falaknaaz Syed reports.business Updated: Apr 22, 2009 22:35 IST
The non-life insurance joint venture between the Burman family of the Dabur group and Boston-headquartered Liberty Mutual has hit a roadblock with the industry regulator raising questions about the same group of promoters having stakes in two insurance companies.
The Burmans and Liberty Mutual last year had approached the Insurance Regulatory & Development Authority (IRDA) seeking a licence to launch a non-life insurance company. The company was to be called Dabur Liberty General Insurance Company.
The Burmans already have a 10 per cent stake in Universal Sompo General Insurance Company that was granted a licence in November 2007.
Our concerns are regarding the legal structure (composition of the company). The same promoters cannot have stakes in two companies. We had issued a licence to Univeral Sompo General Insurance which is already up and running. They said the promoters of Universal Sompo General are different from the venture with Dabur. We want people with some corporate identity to have stakes. We didn't have the regulatory comfort in giving a licence and asked them to revert with an acceptable structure around 4 to 5 months back, but they have not reverted," said a senior official of the IRDA.
Mohit Burman, a director on the Board of Dabur and chairman of Dabur Investment Corporation, a group firm which has stake in Universal Sompo General Insurance said, “IRDA has objections to the structure of the (proposed) company. If IRDA gives a licence, I am more than happy to go ahead with the joint venture. For the joint venture with Liberty Mutual, we (the Burmans) have set up a new partnership firm which will hold 74 per cent stake while the remaining 26 per cent stake would be held by Liberty Mutual.”
On a question on capital constraints, Burman said, “We are funding Aviva Life Insurance which being a life insurance company requires high capital. Besides, we are also funding Universal Sompo General and our other businesses. We have no capital constraints.”
Dabur Investment Corporation holds a 10 per cent stake in Universal Sompo. Its other partners are Allahabad Bank (30 per cent), Indian Overseas Bank (19 per cent), Karnataka Bank Ltd (15 per cent) and Sompo Japan Insurance Inc (26 per cent).
Dabur also has 74 per cent stake in Aviva Life Insurance while the remaining 26 per cent is held by UK’s Aviva.