Mumbai: In the biggest consolidation in the Indian insurance sector, HDFC Standard Life on Friday proposed to merge Max Life and Max Financial Services with itself to create an entity with assets worth over Rs 1 lakh crore.
The boards of directors of all three insurance companies have met on Friday and entered into a confidentiality, exclusivity and standstill agreement to evaluate a potential combination of three companies.
Mr Deepak Parekh, chairman, HDFC Ltd, parent of HDFC Standard Life, however, stressed that “at this juncture, all the respective parties are only evaluating this potential opportunity in further detail.
Edinburgh-based Standard Life Plc holds 35 per cent stake in HDFC Life, while HDFC owns 61.63 per cent. Total premium of HDFC Life for FY16 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 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.
”We believe there are significant benefits of a potential combination and if this materialises, it could make the consolidated entity the largest private life insurer in the country,” he said. The top 4 private insurers today constitute 65 per cent of the private insurance market, while the remaining 19 private insurers have a combined market share of 35 per cent.
Mr Parekh also said that financial year 2015-16 was a watershed year for the private sector insurance industry as the combined market share of private life insurers in the individual segment stood at 52 per cent, which for the first time, was higher than the share of LIC. “This is an encouraging trend as 10 years ago, the market share of private insurers was only 35 per cent,” the veteran banker said.
