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After IRDAI red flagged the merger between HDFC Standard Life and Max Life Insurance, both companies have said that they will continue seeking various options and "remain committed to the merger."
Last November, the insurance regulator objected to the merger of Max Life and HDFC Life into a single entity, citing section 35 of the Insurance Act, 1938 which does not allow merger of an insurance company with a non-insurance firm.
The companies then made representations to the regulator, despite which IRDAI on June 7, 2017 reaffirmed its original position, said Max India in a filing on the BSE.
"This is with reference to the composite scheme of amalgamation and arrangement filed with stock exchanges involving Max Life Insurance Company, Max Financial Services Ltd, HDFC Standard Life Insurance Company Ltd, and Max India Ltd. Both HDFC Life and Max Life remain committed to the merger and are evaluating various options," said Max India. HDFC Life Insurance also reaffirmed its commitment to the merger in a separate release.
As per the proposed scheme mentioned in the BSE filing, HDFC Life and Max Life would not directly merge. Instead there has been proposed amalgamation process by which Max India will merge Max Life Insurance with Max Financial Services. And then the insurance wing of the merged entity would be demerged and then transferred to HDFC Life. After which the remaining businesses in the newly formed entity will be combined with Max India. Currently, Max Financial Services is the holding company of Max Life Insurance.
