CHENNAI: The proposed merger between HDFC Standard Life Insurance Co. Ltd and Max Life Insurance Co. Ltd, set to have created an insurance giant with assets of close to Rs 1.1 lakh crore, fell through on Monday. In a statement, Max Financial Services Ltd, Max India Ltd and Max Life all confirmed that the proposed merger with HDFC Life has been called off due to regulatory issues and the exclusivity agreement would not be renewed.
The potential merger would have created India’s largest private sector life insurer, surpassing ICICI Prudential Life Insurance, which is currently second only to state-run Life Insurance Corp. of India (LIC), which has a 70 per cent market share in new business premiums. “The prospective partners had evaluated several alternate structures over the last month. However, the inordinate time associated with finalization and approval of these structures led to this decision,” the statement said.
While both companies had initially proposed the merger of Max Life with Max Financial Services, the structure was not approved by the Insurance Regulatory and Development Authority of India (Irdai), who stated that it was in violation of Section 35 of the Insurance Act which prohibits the merger of an insurance company with a non-insurance company.
In July, HDFC Standard Life Insurance’s board had approved a proposal to sell as much as 20 per cent the insurer through an initial public offering (IPO) even as it reiterated its commitment to a potential merger with Max Life Insurance, which was seen as the long-awaited beginning of a consolidation in private sector insurance.