Buffett set to meet Indian insurance holders

By James Lamont in New Delhi

Published: March 24 2011 18:35 | Last updated: March 24 2011 18:35

Warren Buffett, the chairman of Berkshire Hathaway, will on Friday meet his new insurance policy holders in the Indian capital following his company’s entrance into one of the fastest-growing retail markets in the world.

Berkshire Hathaway, the financial services-led US conglomerate, has entered India through the insurance distribution business in a tie-up with Bajaj Allianz general insurance products.

Bajaj Allianz is an insurance company controlled by Bajaj Finserv, a local financial services group, with Allianz, the Munich-based financial group, as a minority partner.

Caps on foreign investment in India’s insurance sector prevent foreign insurance groups from owning more than 26 per cent of a company.

Raising these caps was a priority of successive governments and viewed as a way to help meet the financial needs of India’s 1.2bn people and deepen India’s financial markets. But financial reform has stalled in parliament and frustrated would-be investors.

The insurance sector is dominated by Indian institutions such as the state-owned Life Insurance Company, Oriental Life Insurance, ICICI Lombard and Bajaj Allianz. It has yet to attract widespread foreign investment from the US or Europe to target a growing middle class and rising incomes.

While the arrival of Berkshire Hathaway is an important signal to other US insurance companies, Mr Buffett has hinted he is scouting for opportunities to support an innovative and well-managed Indian company seeking to list its stock in the US.

Ajit Jain, the head of Berkshire Hathaway’s reinsurance business, made it clear his group was not prepared to “do all the work” and take a minority shareholding in any business venture in India.

He viewed the tie-up as a “small step” but one that would help his group understand India’s operating and legal environment better. “I hope it leads to something big, fairly quickly,” Mr Jain told NDTV Profit television.

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