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Top 10 merger/acquisition in insurance industry

December 09, 2020
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This article is written by Guruswaminaathan who is pursuing a Diploma in M&A, Institutional Finance and Investment Laws (including PE and VC transactions) from LawSikho.

Introduction

The insurance sector in India has witnessed significant growth in the market. The reason is because of liberalization in industrialization and by government initiatives like providing schemes to the general public to take life insurance and non-life insurance policies from the issuers.

Thus the insurance sector becomes more competitive and attractive to the industrialist to emerge into this sector.

Most of the insurance companies are banks both public and private doing insurance business, The bank(s) by way of a joint venture with another domestic bank or company or by collaborating with a foreign entity who is engaged in the same business or others enters into the sector. On the other hand, the company(s) make an entrant or expand its business by way of acquisition or merging with an existing insurance company.

The sector witnessed some major acquisitions of private insurance businesses and in 2019, the Government of India announced mergers of public banks due to which impacts the insurance sector.

Amalgamation and transfer of insurance business

Section 35, 36, 37, 37A  of Insurance act, 1938 provides guidelines to the insurers to amalgamate and transfer the business.

The parties are required to draft the scheme of amalgamation and require the approval of IRDA in order to give effect to such a scheme.

Top 10 merger/acquisition in insurance sector

BHARTI AXA GENERAL BUSINESS COMPANY LIMITED and ICICI LOMBARD GENERAL INSURANCE COMPANY LIMITED MERGER DEAL

STATE-OWNED INSURANCE COMPANIES MERGER DEAL

HDFC LIFE INSURANCE AND MAX LIFE MERGER DEAL

UNION BANK OF INDIA AND INDIA FIRST LIFE INSURANCE COMPANY ACQUISTION DEAL

PUNJAB NATIONAL BANK AND CANARA HSBC OBC LIFE INSURANCE COMPANY LIMITED MERGER DEAL

IRDA yet to clarify and to provide proper guidelines for such circumstances.

RELIANCE CAPITAL AND AMP SANMAR LIFE INSURANCE COMPANY ACQUISITION DEAL

EXIDE LIFE INSURANCE COMPANY LIMITED ACQUISITION DEAL

HDFC ERGO general life insurance and L&T general insurance Acquisition Deal

HDFC and Apollo Munich Health insurance company limited merger

HDFC is benefitted by:

STAR HEALTH AND ALLIED INSURANCE COMPANY LIMITED ACQUISTION DEAL

Conclusion

Merger and acquisition in the insurance sector have become a recent trend because of the continuous evolution of the economy and market conditions. The insurance act, 1938 and IRDA guidelines are adequately framed to the requirements of circumstances however it still lacks clarity.

The issue lies in the provisions for holding promoter shares in more than one issuer. The IRDA has to solve from case to case and it also creates confusion and discomfort in the policyholders when their issuer ceases or merged with another. The information about the continuance of their policy, payments of premium, raising claims is uncleared. Thus IRDA needs to frame a definite procedure in terms of holding the promoter’s stake in case of holding in more than one issuer and procedure to comply during the transition period. 


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