For nearly 10 years, Axis Bank and Max Life have had bancassurance arrangement.
Axis Bank has entered into a deal to acquire a stake in Max Life Insurance Company Ltd. As part of the plan, Axis Bank, Max Financial Services Limited and its subsidiary Max Life Insurance Company Ltd have signed a confidentiality and exclusivity arrangement to explore the possibility of Axis Bank entering into a “long-term strategic partnership” with Max Life.
Although Axis Bank and the Max group did not disclose details about the former’s equity participation, market estimates are that Axis Bank is likely to get over 20 per cent stake in Max Life, the largest non-bank owned private life insurer in India. Max Financial Services presently holds 72.5 per cent stake in Max Life, while Mitsui Sumitomo Insurance and Axis Bank hold 25.5 per cent and 2.0 per cent stake, respectively.
In 2017, HDFC Life Insurance and Max had announced a merger, but the deal was called off as the two were unable to thrash out an alternative structure for the transaction that had been rejected by the regulator Irdai in its existing form and because HDFC Life’s stakeholders wanted to go for an initial public offering rather than wait for the union to take place.
Axis Bank and Max Life have had a successful bancassurance arrangement for nearly a decade. “The new premium generated through this arrangement has aggregated to over Rs 12,000 crore over this period, while maintaining high persistency. Both companies have invested extensively in product and need-based sales training, thereby leading to consistent increase in productivity,” Axis Bank said in a statement.
Amitabh Chaudhry, MD and CEO, Axis Bank, said, “... we constantly keep assessing various strategic opportunities and we see a potential for greater participation in the under-penetrated life insurance space. We have had a long standing bancassurance relationship with Max Life and the ongoing discussions are a step further to deepen and strengthen this strategic partnership.”
Analjit Singh, founder and chairman, Max Group, said, “The Max Life-Axis Bank partnership is a natural. The partnership has already set multiple benchmarks in the life insurance industry for policy sales, customer retention, rigorous training to ensure need-based policy writing, technology integration etc.”