Max Financial Services is in discussion with Aditya Birla Group to evaluate the possibility of the merger of their life insurance companies, Max Life Insurance and Birla Sun Life respectively. With the merger, they are targeting the creation of a top private life insurance business in the country.
Analjit Singh, Founder and Chairman of Max Financial Services is also negotiating with UK-based company Northern Trust to sell his promoter stake of 30% in the company.
These talks are in the early phase and the stakeholders are examining regulatory norms around the process. The discussions gathered momentum after Max Life Insurance Co. Ltd. and HDFC Standard Life Insurance Co. Ltd. called off their intentions of merging at the end of July this year. This was primarily due to the failure to win regulatory approval for the merged entity.
The main reason for Aditya Birla Group to explore the possibility of a merger was the inadequate partnerships they had with banks in the country. Max Life Insurance is in partnership with some of the largest private banks in India, including Yes Bank and Axis Bank.
It is understood that the absence of a leading bancassurance partner has been detrimental to the business of Birla Sun Life. The premium mix for the company has shifted towards group business in the financial year 2017-18.
Analysts believe that the key challenges for the merger will include agreeing on a non-compete fee and keeping the interest of Axis Bank in the merged entity.