Biggest merger of the country is back in IRDAI’s court

HDFC Life Max Life if the biggest merger in the country’s insurance sector, the HDFC Life-Max Life deal, has been returned by the Attorney General (AG) to the Insurance Regulatory and Development Authority of India (IRDAI) without any comment. While both the companies did not confirm the development, in a joint statement, they said: “We have heard media reports about this development but don’t have an independent confirmation. HDFC and Max Group remain strontly committed to conclude this proposed merger and will be working with the insurance regulator to do so.” The deal, which was announced in August 2016, ran into rough weather after the IRDAI sent it to the AG for approval. According to Section 35 of the Insurance Act 1938, no life insurance business of an insurer can be transferred to or amalgamated with the life insurance business of any other insurer, except in accordance with a scheme prepared under this Section and approved by the Authority. The three-stage deal had envisaged that Max Life was to merge with Max Financial Services, which would in turn merge with HDFC Life. The deal structure was designed in this manner so that HDFC Life would automatically get listed on the stock exchanges since Max Financial Services is already listed.