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.


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.

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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 insurance company limited signed a definitive agreement with ICICI lombard general insurance company limited to merged as a single entity.
  • The deal shall be completed by a share swap. The shareholders of Bharti AXA general insurance receive two shares of ICICI Lombard general insurance for every 115 shares held by them.
  • The reason for the merger is for the benefit of policyholders of Bharti AXA. Through this merger deal, the policyholders shall avail better service agencies and partners. There will also better efficiency in distribution channels.


  • The Government of India proposed to merge the three government-owned insurance companies into a single entity. The deal is expected to complete at the end of March 2020.
  • The three public insurance companies which ought to be merged are: i) National insurance company limited  ii) United India insurance company limited iii) Oriental Insurance company limited.
  • The purpose of the merger is that all three companies struggle to maintain the solvency ratio.
  • However, the deal is called off due to the poor financial health of the companies. The government approved to infuse capital of INR 12,450 crores into the three companies to up-held its business.


  • In 2016, HDFC Standard life insurance company and Max Financial services limited signed a definitive agreement to merge HDFC life and MAX life insurance.
  • MAX life insurance was created in 2016 by demerger from MAX India limited and proposed to merge MAX life insurance with MAX financial services limited.
  • The merger is not approved by IRDA citing that the merger scheme violates section 35 of the Insurance act. An insurance company cannot be merged with a non-insurance company.
  • Due to the failure of the merger of MAX life and Max Financial, HDFC life called off the merger proposal with MAX Life insurance company limited.


  • India first life insurance company is a joint venture between Bank of Baroda, Andhra Bank, and a UK-based financial company Legal and general incorporated in 2009.
  • In 2018, Legal and general sought IRDA approval to sell its 26% stake to Warburg Pincus.
  • In 2019, Andhra bank proposed to sell its 30% stake in the joint venture but the transaction is not yet finalized.
  • In 2019, the Government of India merged Bank of Baroda, Andhra Bank with United Bank of India.
  • United Bank of India is holding a promoter stake in Star Union Dai-ichi Life Insurance.
  • Post-merger of Banks, United Bank of India acquired the Bank of Baroda’s 44% promoter stakes in India first life insurance company.
  • As per guidelines of IRDA a promoter cannot hold promoter shares in more than one insurance company.
  • Recently IRDA permits the United Bank of India to continue to hold the stakes in both the insurance companies.
  • In August 2020, the United Bank of India intends to divest its shareholding in India first life insurance company to comply with IRDA guidelines.


  • In 2013, Punjab National Bank and US-based company Met life signed a definitive agreement to form a joint venture company called PNB Metlife insurance company limited.
  • PNB acquired a 30% stake and Metlife holds 26% in the insurance company.
  • In 2019, the Government of India merged major public banks. Among one of them is the oriental Bank of Commerce merged with PNB.
  • Oriental Bank of Commerce at the time of the merger is holding a 23% promoter stake in Canara HSBC OBC life insurance company limited. Post-merger of Oriental Bank, Punjab National Bank had to acquire Oriental Banks’s promoters stake in Canara HSBC OBC life insurance.
  • As per IRDA guidelines, a promoter cannot hold stakes in more than one insurance company. However, IRDA allowed Punjab National Bank to continue to hold the stakes in two insurance entities.

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


  • AMP Sanmar life insurance company limited is a joint venture entered by and between AMP groups and Sanmar groups.
  • AMP group held 26% and the Sanmar group held 74% in the joint venture.
  • Consolidation of AMP businesses in Australia and New Zealand is the prime reason for restructuring the ownership in a joint venture in India.
  • Both AMP groups and Sanmar groups intend to sell their stakes and in search of a potential buyer.
  • Reliance capital part of Reliance group acquired 100% stake in the Joint venture.
  • Through the acquisition, Reliance capital made entrant into the insurance sector via buyout rather than apply for a fresh license.
  • The name of the company is changed to Reliance life insurance company limited.
  • In 2011 Nippon limited a Japanese-based company acquired 26% in Reliance life insurance company limited.
  • In 2016, Nippon limited increased its stake to 49% in the company. The name of the company changed to Reliance Nippon Life Insurance company limited.


  • In 2000, the ING group signed a definitive agreement with Vysya Bank to form a joint venture life insurance company named ING Vysya life insurance company limited headquartered in Bangalore.
  • In 2005, Exide industries intend to expand its business and explore new business model, thus acquired a 50% stake in ING Vysya Life insurance to make an entrant into insurance sector.
  • In 2013, ING group bailouts from the Joint venture by selling its 26% stake to Exide Industries.
  • In the same year, Exide industries got approval from CCI and IRDA to acquire the remaining 24% stakes from other remaining shareholders and thus becomes 100% shareholder in the Joint venture.
  • The name is changed to EXIDE life insurance company limited.

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

  • L&T general insurance company limited is a subsidiary of L&T, formed in 2010.
  • L&T general insurance occurs losses, thus L&T intends to sell its stake in the company.
  • In 2016, HDFC ERGO general insurance company acquired a 49% stake from L&T.
  • Through this transaction, HDFC ERGO able to expand its policyholders by on-boarding the policyholders of L&T insurance into HDFC ERGO.
  • HDFC ERGO can optimize the distribution channel and can rationalize the offices.
  • HDFC ERGO can provide better after-sale service to customers.

HDFC and Apollo Munich Health insurance company limited merger

  • Apollo Munich earns 2-3% annual profit which is significantly low and the company is unable to maintain the liquidity ratio as per the requirement of IRDA.
  • The need for additional capital infusion, synergies, and cost-saving will be the solution to improve profitability.
  • HDFC buys a 51% stake in Apollo Munich from Apollo group.
  • The name is changed to HDFC ERGO Health insurance company limited.
  • In November 2020, HDFC got approval to merge HDFC ERGO general insurance and HDFC ERGO Health insurance into a single entity.

HDFC is benefitted by:

  • improving cost-efficiency
  • Increase in policyholders
  • Cost synergies
  • Technology optimization and rationalization of offices.
  • Through this merger deal, HDFC becomes the second-largest private sector insurance player in the market.


  • Star health was incorporated in 2006, provides health insurance, overseas medical claims, and personal injuries. 
  • In 2018, consortium investors called safe corp holding private limited signed a definitive agreement with shareholders of Star health to acquire their shares.
  • The deal is to acquire over 90% stake in the company for INR 6500 crore.
  • Rakesh Jhunjhunwala holds 35% and the remaining shares will be held by Safe corp holding
  • In 2019,  safe corp holding private limited comprising Rakesh jhunjhunwala, west bridge capital, and Madison capital acquired Star Health and Allied insurance company.
  • The reason for such acquisition is for better management of the company and to expand its business in tier 1 cities.


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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