Birla Sun Life, Max Life Initiate Merger Talks; New Life Insurance Giant could Soon be in the Making

Analjit Singh led Max Financial Services is in talks with Aditya Birla Group to explore a merger of their life insurance businesses, Birla Sun Life and Max Life Insurance with the aim to create one of the top 3 private life insurers in the country, said multiple sources aware of the discussions.

However the sources mentioned above warned that these discussions may not gaurantee a transaction.

Birlas have been on the lookout for scaled franchise for long while Singh has been open to monetising his investments. The key rationale for exploring a merger is the fact that Birla Sun Life does not have large bank partners which Max has in the form of Axis and Yes the third and fourth largest private bank in the country Even though in the last one year, Birla Sun Life have managed to tie up with six banks, they are all much smaller.

Birla-Max discussions are ongoing at a shareholder level to work out the correct structure. It has not yet reached a board level," said an official in the know on condition of anonymity as the talks are in private domain. "Increased scale can potentially yield to benefits of cost synergies as well as multi channel distribution, through agencies, brokers, direct marketing and bancassurance," he added. Absence of a strong Banca partner has been hurting Birla Sun Life's distribution with premium mix shifting towards group business (62% contribution in FY17). In Q1FY18, as per its management, new business premium saw 33-34% growth driven by retail segment.