India’s Life Insurance Business Just Got Its Biggest Player

2014 - 2015 saw a record number of mergers and acquisitions in the Insurance industry worldwide. UK alone had more that 64 insurance companies that were either merged or acquired by bigger rivals. As the industry learns to live with consolidations, we see similar trends in the life insurance business worldwide.

Creating India’s Biggest Insurance Company
Two Indian companies are making news headlines as they have came together to form India’s biggest insurance company. Insurance is a relatively small industry in India. For a country with a population of over 1 billion people,  only a small percentage of people have access to general and health insurance. There are about 50 odd insurance companies in India and the country accounts for 1.5% of the world’s total insurance premiums.

MAX Life & HDFC Life Merge
HDFC bank has earned a reputation for itself as India’s most valuable lender over the last 20 years. The HDFC Standard Life Insurance Company is India’s third biggest life insurer in the private sector. Max Life, a subsidiary of Max Financial Services is India’s fourth biggest life insurer. As these two big players come together, they will create HDFC Life - India’s biggest insurance company. The new company is valued at $10 billion, a big deal for the Indian Life Insurance business.

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A Well Timed Move
HDFC Life should greatly increase market penetration as the two insurance companies complement each other’s customer base and services. It definitely is an exciting time for their shareholders who have seen their shares go up in value. HDFC Life is also expected to make insurance more affordable in India - this has always been the challenge in getting people to sign up for insurance in the country. A KPMG report pegs the Indian insurance industry to be worth more than $400 billion by the year 2020. Hence this is the right time for Max Life and HDFC life to come together and make a joint effort to leverage the huge opportunity the country life insurance business promises.

As with all mergers, this one will also need to go through the mandatory approvals from shareholders, regulators and government authorities in India.

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