And this will be funded by the dividend that M&M earns from Mahindra Finance; only about one third of that dividend will be required over the first five years. Our vision is to be the number one life insurer in rural and semi-urban India because of Mahindra Finance's footprint, and a significant player in urban India with a leadership position in protection solutions. The protection gap in India is huge: India's sum assured as a percentage of GDP is 85%, vs. 332% in Singapore and 250% in Japan and the US. Demographics are favorable: middle to high-income households will be 50% of the population by fiscal 2030. The Viksit Bharat goals aim for insurance for all by 2047. There is a significant access gap in rural India, which has 65% of the population but only 2% of life insurance branches. Critical success factors include brand trust, distribution control (which we have with Mahindra Finance), and strong underwriting and reinsurance capabilities from our partner Manulife. Manulife is a leading Canadian life insurer with $1.1 trillion in AUM, 36 million customers, and a 16.2% core ROE. This JV extends our financial services footprint. We have a strong right to win from brand trust, distribution, treasury relationships, and Manulife's expertise in product, underwriting, and agency. We will leverage technology, digital, and AI. We expect to deploy 250 crores per year for the first five years, totaling 3,600 crores over ten years, with Manulife matching that. We aim for a valuation of 18,000 to 30,000 crores in ten years. Breakeven is expected closer to year ten, but valuation is based on embedded value. We believe this will add meaningful value to M&M shareholders.
Yes. Please send your questions. I'm getting the questions as we go along. Anish, the first question has come from CNBC Yash Jen. By when do you expect to apply with IRDAI and by when do you expect to start operations? There are a couple more but let's start with this because this is a question that everyone's asked.
We expect to apply for the license in about 2 to 3 months, and realistically it will take 15 to 18 months for the joint venture to start operations.
Okay. There are many existing life insurers where promoters are looking to sell. Would it not have been a better strategy to acquire one of those and get Manulife in it? Also, acquiring an existing insurer would have given you some distribution strength.
We feel we've got a very strong proposition here with Mahindra Finance distribution, with the customer base we have not just in Mahindra Finance but also across the Mahindra group. We feel we can build a much stronger business. The way we've started it, it's also a lot more capital efficient and one that will return much greater returns for our shareholders.
There's a question also on why choose life insurance and not general. You sell cars, tractors, the motor portfolio. That would have supported you. You would have got support from there.
Life insurance is underpenetrated today and we see a tremendous opportunity here, which is why we've started with life. If the insurance regulations allow a composite license, that could be a potential upside for the JV, and that's something we will evaluate when that happens. Yes, general is attractive as well, but given the opportunity we see that is very meaningful today, we've started with life.
Okay, going to Economic Times now. Shilp asked: some of the questions are repeat questions so I'm skipping those, but has the management team or CEO for the new JV been identified? Will leadership come primarily from Mahindra, Manulife, or external hiring?
All those details will follow. We have, as you would expect, a structured approach to this, and as soon as we finalize those, we will share those details.
She also asked: what is the estimated break-even period for the life insurance venture?
Again, typically the break-even period is 10 to 12 years. We feel confident that we can improve on that. But I think once we start operations and once we start seeing how things are moving, we'll have a better sense of the exact time. But at this point, I would say that we will break even much faster than most others have done.
Sure. Now switching to NDTV Profit. Vishnu has asked questions on why focus on semi-urban or rural locations for this.
The focus on rural and semi-urban comes from Mahindra Finance's strength, from the fact that this is an underpenetrated area. Only 2% of life insurance branches are in rural and semi-urban. It's also an area that's emerging very rapidly in India. There is a significant amount of wealth creation in rural and semi-urban, and we feel we should offer the set of products to that area as compared to what they have today. It doesn't say that we will not focus on urban areas. We will, and we feel we've got a compelling value proposition there as well. That will be focused on protection, but we will have a suite of products that customers would need.
Okay. Anish, one more question from NDTV Profit: how do you see the recent buoyancy because of the GST cut from the government on life insurance? Is the JV trying to capitalize on it?
The JV will benefit from that clearly. We are building this for the long term. In that sense, the momentum that we have today is a very good place to start with.
