A$170m to be invested in deal with State Bank of India

Insurance Australia Group is to invest A$170 million ($108 million) in a joint venture with State Bank of India, taking its first step into the fast growing Indian insurance market.

IAG will hold 26 percent of the joint venture, with an option for 49 percent in the future. The joint venture will commence trading in 2009.

"India has a large and expanding economy, with a general insurance market predicted to grow 15-20 percent per annum over the next 10 years," said IAG Chief Executive Michael Wilkins.

The Indian insurance market is one of the fastest growing in the Asia region. IAG currently has operations in Thailand and Malaysia, and part of its strategy is to pursue selective growth in Malaysia, Thailand, India and China.

IAG and SBI signed a memorandum of understanding for a general insurance venture in May.

State Bank of India has over 100 million customers, a network of more than 11,000 branches, and access to an additional 46 million customers and 4,500 branches through its associate banks.