In what could be the biggest consolidation in the Indian insurance sector, HDFC Standard Life today proposed to merge Max Life and Max Financial Services with itself to create an entity with assets worth over Rs 1 lakh crore.
Boards of HDFC Standard Life Insurance Co, Max Life Insurance Company Ltd and Max Financial Services Ltd at their respective meetings held today, approved entering into a confidentiality, exclusivity and standstill agreement to evaluate a potential merger.
They will explore "a merger of Max Life and Max Financial Services into HDFC Life by way of a scheme of arrangement", HDFC Ltd said in a statement.
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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, 2016, was Rs 16,313 crore and AUM was Rs 74,247 crore.
Max Life is a joint venture with Mitsui Sumitomo Insurance Co. 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 2016 was Rs 9,216 crore and AUM was at Rs 35,824 crore.
The proposed arrangements would be subject to due diligence, definitive documentation and applicable board, shareholder, regulatory, respective High Courts/NCLT, and other third party approvals, as may be applicable, it added.
India currently allows 49 per cent foreign investment in the insurance sector.
There are 24 life insurance companies in the country, including state-owned LIC with a market share of over 70 per cent.
