HDFC Standard + Max Life = Rs 50,000 crore, India’s largest private insurance company

As HDFC Life and Max Life are all set to create the country's biggest private life insurer, Deepak Parekh and Analjit Singh came together in a press conference to disclose some of the details of the deal which is now sealed.

Parekh said he believes macro economic conditions in India are favourable for such a merger and, HDFC and Max have strong synergies. Meanwhile Analjit said he has not seen effective consolidation in life insurance industry in years.

Key announcements made:

- HDFC LIFE to be the listed entity on completion of merger process - Max Life to merge into Max Fin Svcs, then into HDFC LIFE -Renewable premiums to grow around 10% per year going ahead. New business premium to grow by 15% in five yrs -Deal is subject to regulatory, shareholder approvals, and there is no need for open offer in Max Life merger -The agreement provides for a mutually agreed 6-month exclusivity period for due diligence and discussions between the parties in relation to a proposed transaction.

The combined entity would be the largest private sector insurer, both in terms of assets under management and new business premiums. Assets under management of the combined entity would touch Rs 1.10 lakh crore and new premiums would almost touch Rs 9400 crore.

HDFC Life is a joint venture between HDFC and Standard Life Plc, a provider of financial services in the UK. While HDFC holds 61.65 per cent in it, the foreign partner holds 35 per cent. Max Life Insurance, is a joint venture between Max Financial Services Ltd. and Mitsui Sumitomo InsuranceCo. Ltd. The foreign partner holds 25 per cent in the insurer. Max Financial Services is already listed on the stock exchanges and is the holding company of Max Life Insurance.

For HDFC, this will be the second such merger announced in this month. Earlier in June, HDFC Ergo General Insurance, the general insurance arm of mortgage lender HDFC, said that it will acquire L&T General Insurance for Rs 551 crore, which if completed would be the first ever merger in the insurance industry.