The merger of Max Life Insurance with HDFC Life Insurance could take the entire financial year of 2017-18 (FY18) to be completed. While a final nod is expected from the Attorney General of India in the next few weeks, multiple regulatory approvals will be required before the merger is put to effect.
Amitabh Chaudhary, MD and CEO, HDFC Life in an interaction with Moneycontrol said, “If we have the approval for the merger in the next 30-45 days, the entire process will be completed only by March 2018. This is because apart from the Insurance Regulatory and Development Authority of India (IRDAI), we will require a nod from the court, Securities and Exchange Board of India and also Competition Commission of India, among others.”
Mr. Chaudhary also added that they will need a final nod from the insurance regulator once all these other approvals have been received. However, HDFC Life will be automatically listed on the stock exchanges once the process is completed, through a process of reverse listing.
In June 2016, Max Financial Services and HDFC had said they had received a board approval for the merger of their life insurance businesses, Max Life and HDFC Life, respectively. Here, Max Life was to merge with its holding company Max Financial Services first, which would in turn merge with HDFC Life. Since Max Financial Services is already listed, HDFC Life would get auto-listed post the merger.
Sources said that the issue was merely technical and that the nod should come through within 35-40 days. IRDAI had invoked a particular section of the Insurance Act that pertained to listing which had said that one insurer can only merge with another insurance entity.
In this merger structure, since Max Financial was to merge with HDFC Life, IRDAI questioned the legality of this agreement.
An application was filed by Max Life and HDFC Life seeking the in-principle approval of IRDAI for the above-mentioned scheme on September 21, 2016. However, the insurance regulator expressed some reservations about the deal and it has been referred to the Attorney General of India.