Max India pulls out Max Life-HDFC Life merger deal

The merger of Max Life Insurance with HDFC Life Insurance has been called off. The exclusivity arrangement which the parties had entered into last year and was valid till July 31 will not be renewed.

"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," said Max Financial Services.

Max Financial Services was created in 2016, as a result of a demerger of the erstwhile Max India, to provide investors specific and undiluted access to the Group’s life insurance business, provide sharper focus to Max Life and unlock shareholder value.

Max Life, however, will continue on its path to aggressively invest in organic and inorganic growth levers. This wiill be done through investments in enhancing own channels such as agency and digital, delivering superior policyholder experience, deepening and leveraging existing bancassurance partnerships, and forging new distribution alliances. In addition, it will pursue acquisition opportunities as the industry further consolidates.

The merger of HDFC Life and Max Life, which was announced in June 2016, ran into rough weather after the insurance regulator and the merger was rejected. Here, Max Life was to merge with its holding company Max Financial Services first, which would, in turn, would merge with HDFC Life. Since Max Financial Services is already listed, HDFC Life would get auto-listed post the merger.

However, after the application seeking in-principle approval was sent to Irdai, in November 2016, the regulator expressed concerns around Section 35 of the Insurance Act 1938, which does not allow merger between one insurance business and another (non-insurance) business. In this particular case, Max Financial Services was a non-insurance company.

Last week, HDFC announced that it planned to list HDFC Life Insurance on the stock exchanges.