Life after Bajaj: Allianz fast tracks plans of new alliance with Jio Financial

Allianz SE is stepping up efforts to forge an alliance with Mukesh Ambani-led Jio Financial Services (JFSL) for a second stab at the domestic life and general insurance market, said people in the know. This follows Monday’s announcement that it was ending its 24-year joint venture with Bajaj Group.

The German financial services powerhouse will sell its 26% stake in Bajaj Allianz General Insurance Co and Bajaj Allianz Life Insurance Co to its Indian partner for $2.8 billion. It may receive the proceeds in several parts.

Talks between executives of Allianz and Reliance Industries (RIL), which owns Jio Financial, have been going on for several months. These intensified after it became public that Allianz was “actively considering an exit” last October, and have gathered momentum in recent weeks, said one of the persons cited.

Removal as Promoter Pending

The Munich-based group is clear that it wants to be a minimum 50% partner in any new ventures and may even be open to a larger stake. It also wants to have a bigger say in management and operations.

Bajaj Group hadn’t been too keen to dilute its stake, which had led to differences over the direction of their partnership, said people with knowledge of the matter.

India allows 100% foreign direct investment in insurance.

A formal announcement on an Allianz-Jio venture will come once approvals from regulators—including the Competition Commission of India and the Insurance Regulatory and Development Authority of India—come through, said the people cited earlier.

Allianz will first have to get itself removed as a promoter of the two existing ventures, “but it’s very clear what their plans entail,” said an executive. “They have also been nudged to fast-track their exit and strike a new deal, as Jio too has to ramp up its financial services strategy and has been scouting for large, global partners.”

Allianz declined to comment on market speculation. Jio Financial Services didn’t respond to queries.

Larger Coverage

The German group views India as one of its growth markets, and it will explore new opportunities that strengthen its position in the market and expand its potential to “serve not only as an investor, but also as an operator,” it had said in a statement on Monday. As the proceeds become available, “Allianz will consider options for their deployment that support the company’s strategic ambitions, in particular, the reinvestment of sale proceeds into potential new opportunities in India.”

RIL chairman Mukesh Ambani had referred to JFSL’s plans during his address at the annual general meeting in 2023. JFSL “will enter the insurance segment to offer simple, yet smart, life, general and health insurance products through a seamless digital interface, potentially partnering with global players,” he had said.

It currently has an insurance broking business, having expanded its direct-to-consumer portfolio to 54 plans—from 24 at the end of January—in categories such as auto, health and life. JFSL is also strengthening its institutional platform across group term life, medical, personal accident and commercial insurance.

“JFSL will focus on scaling its core businesses—lending, payments, and insurance—by leveraging customer-centric digital innovations and technology-driven efficiencies,” said Dipak Saha of KR Choksey.

Apart from being a large foreign institutional investor in Indian equities and debt, as well as infrastructure, Allianz has also been cranking up FDI in the country, with an estimated $1.5 billion deployed in various ventures in alternative investments alone.

Its partners have been diverse, including Kotak Mahindra, Edelweiss and Godrej Group. Allianz has six cross-border reinsurer licences and was also the first foreign reinsurer in GIFT City.

Industry sources said the German company has been keen to partner a large and influential group and Reliance is an obvious choice. Allianz has called the Asia-Pacific region a “strategically important growth area.” As recently as December 10, the company cited the region’s potential, particularly in providing retirement solutions.

The German insurer generated $8.07 billion in total business volume across its property-casualty and life-health retail insurance businesses last year.

Bloomberg in October was the first to report that Allianz was in preliminary discussions with Jio Financial to explore tieups after exiting the joint ventures with Bajaj.

Globally, Allianz, a shareholder in the Bayern Munich football team, has been stepping up its growth plans after setbacks in key markets such as Singapore and India, as well as Europe. Late last year, the Singapore government blocked its bid to acquire a majority stake in Income Insurance after a debate over whether a foreign insurer should be taking over a local company with a social mission.

In December 2024, after over a year of on-and-off discussions with its larger French asset management rival Amundi, Allianz paused negotiations with the company and its majority shareholder Crédit Agricole over plans to combine its 560 billion euros investment management arm, to create a “European Blackrock” with nearly 2.8 trillion euros of assets under management. Allianz is currently competing with other bidders for top insurer Royal Automobile Club of Western Australia.