Max Financial, Axis Bank deal gets IRDAI nod

Max Financial, Axis Bank deal gets IRDAI nod

Shares of Max Financial Services jumped to a record high after the insurance regulator approved Axis entities’ stake acquisition in its life insurance subsidiary.
Axis Bank will enter into a partnership with the company by increasing its stake in Max Life Insurance to 21%. The lender will acquire 9% directly and 3% through its subsidiaries. The rest of the money would be infused into the partnership as capital. The bank will get a strategic stake in Max Life along with three board seats. The Max group may merge Max Financial Services and Max Life for a direct listing of the insurance company.

Axis Bank contributes more than 60% of Max Life’s business. The life insurer has other channel partners but Axis Bank has been the mainstay channel in terms of business. Ergo, the deal with the bank is critical for Max Life. With the culmination of the deal, Max Life is now poised for faster growth. As such, the insurer reported stellar numbers for the December quarter. Max Life reported a 65% rise in value of new business for the quarter while margins improved to 28.6%. Much of this growth can be easily attributed to the tie-up with Axis Bank.
The bancassurance channel saw new business growth of 15% for the December quarter on annualised premium equivalent basis.
The Axis Bank partnership will result in reduced costs and more new business growth.

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