India’s largest life insurance deal in which two large private insurers – HDFC Life and Max Life were about to form the biggest private life insurance business with a combined AUM of Rs.1.37 lakh has been called off. Both the companies cited regulatory issues for calling off the deal.
In a recent exchange filing, Max Financial Services, parent company of Max Life Insurance said, “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.”
It further mentioned, “The exclusivity agreement with HDFC Life, valid till 31st July 2017, will not be renewed.”
In June 2016, Max Financial Services and HDFC Life announced their merger plans through a three-step merger process where Max Life would first merge with its parent company Max Financial Services, a listed entity and subsequently de-merge itself to merge with HDFC Life. The proposed transaction would have to led automatic listing of HDFC Life post the merger.
However, the insurance regulator had expressed its dissent over the merger at that time saying the merger deal violates the law that bars the merger of a life insurance firm with a non-life insurance business.
Currently, HDFC Life has been focusing on getting ahead with its IPO to sell around 15% of the company’s stake. At the same time, Max Life said that it will invest in its own business by enhancing its agency force, deliver superior policyholder experience, deepen and leverage existing bancassurance partnerships and forging new distribution alliances.