Max Life Insurance Co Ltd and HDFC Standard Life Insurance Co Ltd have not succeeded to get the regulatory approval for a merger and thus, have called it off. Had the merger happened, it would have created a giant in the insurance sector with assets worth Rs. 1.1 trillion.
To confirm the merger has been called off, a statement was issued by Max India Ltd, Max Financial Services Ltd, and Max Life. The company has an exclusivity contract with HDFC Life which was valid till 31st July 2017. The agreement has not been renewed.
The company clarified in the statement that several alternate structures were evaluated by the prospective partners in the last month. Due to the time that was needed to finalize and get approval, both parties decided to call off the merger.
Initially, both companies had planned a merger of Max Financial Services and Max Life. But the IRDAI did not approve it. The reason behind the rejection of the proposal was the violation of Section 35 of the Insurance Act. As per this Act, the merger of a non-insurance company with an insurance company is not allowed.
The merger between Max and HDFC was announced last year in August. The merger would have created the largest private sector insurance company in India.