HDFC Life to acquire Max to create biggest private insurer

In a major no-cash deal, HDFC Standard Life today proposed to merge smaller rival Max Life and Max Financial Services with itself to create the country's biggest private sector life insurer with combined assets worth over Rs one lakh crore and premium of Rs 26,000 crore.
The proposed merger, for which the boards of the three companies approved entering into exclusive discussions, would be the biggest consolidation exercise as yet in the Indian insurance sector. The combined entity can overtake ICICI Prudential Life Insurance as the biggest private sector life insurer, but would still remain smaller than state-run LIC.
HDFC Ltd, parent of HDFC Life, said the discussions will explore "a merger of Max Life and Max Financial Services into HDFC Life by way of a scheme of arrangement".

For HDFC, this will be the second merger announcement this month after HDFC Ergo General Insurance announced takeover of 100 per cent stake in L&T General Insurance.
Owing to the Max deal, which would involve swap of shares without any cash changing hands, HDFC Life has put on hold its proposed IPO.
"The IPO plans of HDFC Life has been temporarily put on hold until the due diligence of this deal is done to ascertain whether it will go through or not", HDFC Chairman Deepak Parekh told reporters this evening here.

"We believe there are significant benefits of a potential combination and if this materialises, it could make the consolidated entity the largest private life insurer in the country," he said.

There are 24 life insurers in the country, including state-owned LIC with a market share of over 70 per cent.
The total premium of the merged entity would be nearly Rs 26,000 crore and assets under management will top Rs 1 lakh crore. In the private life insurance space, only ICICI Prudential Life Insurance had reported AUM of Rs 1 lakh crore.
Edinburgh-based Standard Life Plc holds 35 per cent stake in HDFC Life, in which HDFC owns 61.63 per cent.
Total premium of HDFC Life for the financial year ending March 31 was Rs 16,313 crore and AUM was Rs 74,247 crore.

Max Life is a joint venture with Mitsui Sumitomo Insurance Company. Max Financial owns 68 per cent stake in Max Life, while Mitsui Sumitomo owns 26 per cent.
Max Life's total premium collection for year ended March was Rs 9,216 crore and AUM was at Rs 35,824 crore.