Axis Bank, Max Financial Services (MFS) and its subsidiary Max Life Insurance (Max Life) have signed a confidentiality and exclusivity arrangement to explore the possibility of Axis Bank entering into a long-term strategic partnership with Max Life.

CNBC-TV18 was the first to report on Wednesday that Max Financial Services and Max Life Insurance called for a board meeting between the management of the company about the agreement.

Axis Bank is expected to acquire a part stake belonging to Analjit Singh in Max Financial Services. Analjit Singh, Chairman Max Group owns 28.31 percent stake in Max Financial Services and 71.54 percent of his holding in Max Financial Services is pledged.

Amitabh Chaudhry, MD, and CEO, Axis Bank, said, “At the Bank, 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 on-going discussions are a step further to deepen and strengthen this strategic partnership. The successful completion of the proposed transaction is expected to create significant value for all stakeholders.”

Speaking about the development, 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. The strategic interest of Axis Bank in Max Life will lead to the much-awaited permanence and allow both companies to work towards an enduring future for policyholders and other stakeholders. We also believe that the potential transaction will provide a fillip to the life insurance sector overall.”

Axis Bank and Max Life have had a bancassurace (banca) arrangement for nearly a decade. The new premium generated through this banca arrangement has aggregated to over Rs 12,000 crore over this period.

Max Life is currently the largest non-bank owned private life insurer in India. Max Financial Services presently holds a 72.5 percent stake in Max Life while Mitsui Sumitomo Insurance and Axis Bank hold 25.5 percent and 2.0 percent stake respectively.

First Published:Feb 20, 2020 4:34 PM IST