The proposed merger of HDFC Standard Life Insurance Co. Ltd (HDFC Life) and Max Life Insurance Co. Ltd, has come to a standstill post denial by the Insurance Regulatory and Development Authority of India (IRDAI). The regulator said that the current structure of the deal violates Section 35 of the Insurance Act, 1938, which does not allow the merger of an insurance company with a non-insurance firm.
Earlier this morning, Max India Ltd informed the stock exchanges that, “Further to the representations made to IRDAI, the IRDAI has on June 7, 2017, the authority has reaffirmed its original position regarding Section 35 of the Insurance Act, 1938. HDFC Life and Max Life remain committed to the merger and are evaluating various options”.
Both the life insurers had announced their merger plans in August 2016 through a three-step merger process under which Max Life will first merge with its parent company Max Financial Services, then the life insurance business will be de-merged from Max Financial and merged into HDFC Life. The transaction would have led to automatic listing of HDFC Life through a reverse merger process.
In a separate statement to the exchanges, HDFC Life Insurance said, “HDFC Life and Max Life remain committed to the merger and are evaluating various options”.
