This is the second largest foreign investment in India’s insurance industry, as US partner exits to focus on domestic business
Japan’s MS&AD Insurance Group Holdings will be picking up 26% in Max New York Life (MNYL), in an all-cash deal for Rs 2,731 crore ($535 million). The company will now be called Max Life Insurance Company, with the Indian partner Max India continuing to hold 70% stake in the entity.
This is the second largest foreign investment in the Indian insurance industry and the deal values MNYL at Rs 10,504 crore ($2.10 billion). Last year, Reliance Life had sold its 26% stake to Nippon Life for Rs 3,062 crore.
Analjit Singh, Chairman, Max India Limited, said in a statement, “We appreciate our valuable partnership with New York Life and what we have been able to accomplish together. For the next stage of MNYL’s growth and development, we view MS&AD as an ideal partner. They are a financially sound and respected player with a strong international business and strategic aspirations to participate in the growth of life insurance business in India. More importantly, they are aligned with our existing strategy.”
MS&AD is the world’s 7th largest
non-life insurance group, with a market cap of
$12.60 billion. Yasuyoshi Karasawa, President, Chief Executive Officer, Mitsui
Sumitomo Insurance Co. Ltd. (part of MS&AD), told the media, “Max India is
one of India’s most admired companies with a well-recognized brand and a deeply
experienced management team. MNYL is the best possible life insurance company
that we could have partnered with for our entry into the Indian life insurance
space with its life insurance focus, a balanced distribution and product mix,
robust corporate governance practices and a strong & committed management
team.”
With this deal, American insurance behemoth New York Life Insurance Company has exited its joint venture in India, continuing its strategy to focus on North America. New York Life had earlier got out of its operations in China, Thailand and South Korea. It had reported record operating earnings for 2011 ($1.44 billion). New York Life is the largest seller of life insurance in the United States.
Michael Sproule, Executive Vice President and Chief Financial Officer of New York Life Insurance Company, said, “New York Life and Max India have created significant value and we’re very proud of the strong company we’ve created together and the policyholders we serve. Over the long term, the partners’ view has been that the local partner, Max India, is best suited to have greater governance oversight and operating responsibility to oversee the company. Given this view on governance and the fact that the amount paid is consistent with recent transactions, and all parties are comfortable with the value, New York Life believes this is a good time to exit the joint venture and allow the new strategic business model to take shape.”