Shares of Axis Bank rose 0.5% to Rs 744.90 while Max Financial Services surged 9.41% to end at Rs 565.05 on Thursday.
Axis Bank, Max Financial Services and its subsidiary Max Life Insurance Company on Thursday (20 February) signed a confidentiality and exclusivity arrangement to explore the possibility of the private lender entering into a long-term strategic partnership with Max Life.
Max Life is currently the largest non-bank owned private life insurer in India. Max Financial Services presently holds a 72.5% stake in Max Life while Mitsui Sumitomo Insurance and Axis Bank hold 25.5% and 2% stake, respectively
Axis Bank and Max Life have had a successful bancassurace (banca) arrangement for nearly a decade. The new premium generated through this banca arrangement has aggregated to over Rs 12,000 crore over this period, while maintaining high persistency. Both companies have invested extensively in product and need-based sales training, thereby leading to consistent increase in productivity.
Welcoming the ongoing discussions, Amitabh Chaudhry, MD and CEO, Axis Bank, said, "At the Bank, we constantly keep assessing various strategic opportunities and we see a potential for greater participation in the under-penetrated life insurance space. We have had a long standing bancassurance relationship with Max Life and the on-going discussions are a step further to deepen and strengthen this strategic partnership. The successful completion of the proposed transaction is expected to create significant value for all stakeholders."
The transaction will be subject to applicable regulatory approvals, satisfactory completion of due diligence, execution of definitive documentation and satisfaction of other conditions, including the necessary corporate approvals.
Axis Bank is the third largest private sector bank in India.
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Max Financial Services is the parent company of Max Life, India's largest non-bank, private life insurance company. It actively manages a 72.5% stake in Max Life Insurance Company, making it India's first listed company focused exclusively on life insurance.
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