Mitsui Sumitomo Insurance of Japan today picked up 26% stake in Max New York Life Insurance (MNYL) for Rs 2,731 crore.
With the stake transfer, the US-based New York Life exited from the joint venture, which is majority owned by diversified business group Max India.
The transfer was made after obtaining the requisite approvals from Insurance Regulatory and Development Authority (IRDA), Reserve Bank of India and Competition Commission of India earlier this month, MNYL said in a statement.
The MNYL will now be named Max Life Insurance subject to regulatory approvals, it said.
It also announced the appointment of Toshinara Tokoi, and Hideaki Nomura on the MNYL board as representatives of Mitsui Sumitomo Insurance Co.
Post transaction, Max India retains 70% stake remaining 4% with Axis Bank.
The stake transfer culminates the all cash transaction announced in May 2012 which resulted in Mitsui Sumitomo paying Rs 2,731 crore for 26% stake in MNYL. The transaction values Max Life at Rs 10,504 crore, it said.
According to the share purchase agreement, Mitsui Sumitomo acquired 16.63% equity share capital of MNYL from New York Life and 9.37% from Max India.
By way of a separate agreement, New York Life has sold its 9.37% shares in MNYL to Max India.
Japanese insurance company Mitsui Sumitomo and its subsidiaries are mainly engaged in non-life insurance business across the globe. And it is not engaged in life insurance sector in India.
It is present in India through its investment in Cholamandalam-MS General Insurance Company with 26% equity shares and in Cholamandalam-MS Risk Services with 50% share.
Cholamandalam-MS General Insurance is engaged in general insurance business in India and Cholamandalam-MS Risk Services is engaged in risk management and engineering solutions in the fields of safety, health and environment.
As per the existing laws, FDI up to 26% is allowed in the insurance sector under automatic route.
Indian insurance sector has 42 private players in life and general insurance business sharing about 30% of the market share in life insurance and 41% of the market share in general insurance sector.
In 2010-11, the top five companies in India accounted for around 87% of the business. While, LIC is the largest player with about 69.78% market share, the market share of MNYL in life insurance industry is only 1.99%.
