Private sector lender Axis Bank is exploring the possibility of increasing its stake in Analjit Singh-led Max Life Insurance and has signed an agreement with the insurer and its parent Max Financial Services for the same.
“Axis Bank, Max Financial Services Limited (MFS) and its subsidiary Max Life Insurance Company Limited (Max Life) today signed a confidentiality and exclusivity arrangement to explore the possibility of Axis Bank entering into a long-term strategic partnership with Max Life,” the bank said in a statement.
Max Financial Services now holds a 72.5% stake in Max Life while Mitsui Sumitomo Insurance and Axis Bank hold 25.5% and 2% stake, respectively.
Axis Bank and Max Life have had a bancassurance arrangement for almost ten years. The new premium generated through this arrangement had aggregated to more than ₹12,000 crore during the period.
“At the Bank, we constantly keep assessing various strategic opportunities and we see a potential for greater participation in the under-penetrated life insurance space,” Amitabh Chaudhry, MD and CEO, Axis Bank, said.
“We have had a long standing bancassurance relationship with Max Life and the on-going discussions are a step further to deepen and strengthen this strategic partnership. The successful completion of the proposed transaction is expected to create significant value for all stakeholders,” Mr. Chaudhry added.
Earlier in 2017, Max Life was in talks with HDFC Life to sell stake. However, the deal fell through after the insurance regulator rejected the proposed structure of the deal and an alternative structure could not be worked out. Incidentally, Mr. Chaudhry was the MD & CEO of HDFC Life when the deal with Max was contemplated.
“The Max Life-Axis Bank partnership is a natural,” said Analjit Singh, founder and chairman, Max Group.
“The strategic interest of Axis Bank in Max Life will lead to the much awaited permanence and allow both companies to work towards an enduring future for policyholders and other stakeholders. We also believe that the potential transaction will provide a fillip to the life insurance sector overall,” Mr. Singh added.
“The transaction will be subject to applicable regulatory approvals, satisfactory completion of due diligence, execution of definitive documentation and satisfaction of other conditions, including the necessary corporate approvals,” the statement said.
