HDFC Life and Max Life are evaluating various options to merge and both the companies are committed to the deal despite reservations expressed by the insurance regulator, according to a statement issued by the former.
“Further to the representations made to IRDAI, the IRDAI has on June 7, 2017, reaffirmed its original position regarding Section 35 of the Insurance Act, 1938,” HDFC Life said in the statement. “HDFC Life and Max Life remain committed to the merger and are evaluating various options.”
In November 2016, the Insurance Regulatory Authority of India (IRDAI) had expressed reservations on the proposed amalgamation of Max Life and HDFC Life into a single entity citing concerns over compliance with Section 35 of the Insurance Act, 1938.
Section 35 of the Insurance Act, 1938 does not allow the merger of an insurance firm with a non-insurance firm.
In August 2016, the boards of HDFC Life and Analjit Singh’s Max group companies had approved the merger of HDFC Life and Max Life, a deal that would have created the largest private sector life insurance company in the country.
It was proposed that in the first phase of the merger, Max Life will merge into Max Financial Services, then the merged entity will demerge life insurance business to HDFC Life and finally, the non-life insurance business of Max Financial Services will be merged with Max India. Both Max Financial and Max India are listed entities.
The companies had sought in-principle approval from the insurance regulator for the proposed amalgamation scheme in September 2016.
Deepak Parekh, chairman, HDFC Ltd, had said, during the announcement of the deal in August last year, that the transaction was expected be completed within 12 months.
