Mahindra Finance To Foray Into Life, General Insurance Business

Mahindra & Mahindra Financial Services Ltd. said it will enter the life, health and general insurance segments to diversify its sources of income, away from its primary vehicle lending business.

The company's board approved undertaking supplemental business activity of soliciting and procuring insurance business as a "corporate agent" (composite) in life, health and general insurance—both group and individual—an exchange filing said on Thursday.

The non-banking financial company will seek the shareholders' nod via a special resolution.

Entry into such insurance segments will also be subject to obtaining necessary approval from the Insurance Regulatory and Development Authority of India and no objection from the Reserve Bank of India and other regulatory authorities, the company said.

Mahindra Finance will initially invest Rs 5 to 10 crore in the new insurance businesses, mainly towards technology set up, manpower hiring and training and certification costs.

It expects net fee income from these new segments could be approximately 0.1% to 0.2% of its standalone average assets over the next 1-3 years.

The company is among India's leading vehicle and tractor financier and currently offers personal and commercial lines insurance. It is also a major player in small business lending and housing finance.

Subsidiary Mahindra Insurance Brokers Ltd. is involved in insurance broking in life, non-life and reinsurance businesses. It reported an income of Rs 289 crore in the second quarter—7% of the parent's total consolidated income—with over 5.8 lakh policies listed.

Shares of Mahindra and Mahindra Financial Services closed 6.57% higher at Rs 289.40 apiece ahead of the announcement on Thursday, as compared with a 1.34% advance in the benchmark BSE Sensex.