Dutch banking and insurance group ING is to sell its 26 percent stake in an Indian insurance venture to local partner Exide Industries, the second foreign insurer to exit a competitive sector in India within a year.
ING said on Wednesday the move was part of the sale of all its Asian insurance and investment management operations. The sale of the stake in ING Vysya Life Insurance was expected to be completed during the first half.
Besides buying ING's 26 percent in ING Vysya, Exide said it would buy 24 percent from two other private Indian investors - Enam Group and Hemendra Kothari Group - for a total of about 5.5 billion rupees ($102 million).
Exide, which already owns 50 percent of ING Vysya, will "induct a new international life insurance player" after the completion of the acquisition of the remaining 50 percent stake, it said.
ING's exit from the venture comes within a year of New York Life selling its 26 percent stake in a life insurance joint venture with Max India to Japan's MS&AD for about $530 million.
India's insurance business was full of promise when it was thrown open to competition in 2000, but has instead been brought to its knees by losses, regulatory change, uncertainty and a sharp slowdown in economic growth.
A proposal to raise the foreign ownership of insurance firms to 49 percent from 26 percent, key to bring in funds to the loss making sector, has been pending for a long time due to fierce political opposition to the move.
The life insurance industry, which makes up about three-quarters of the Indian insurance sector, has lost a combined $4 billion in the past decade and was battered by a 2010 clampdown on the sale of lucrative equity-linked products.
Nine of the 23 private sector life insurers in India, including units of HSBC, Italy's Generali and Dutch life insurer Aegon, lost money in the year ended in March 2012, according to the sector regulator.
ING said on Wednesday the sale of its stake in ING Vysya Life does not affect ING Vysya Bank, a listed Indian bank in which it has a 44 percent stake, nor ING's fund management operations in India.