Standard Life deal opposed by regulator

British insurer Standard Life said that India’s insurance regulator had “expressed reservations” in accepting the current deal terms for the purchase by its Indian joint venture of Max Life Insurance.

In August HDFC Standard Life Insurance Co (HDFC Life) agreed to buy India’s Max Life Insurance in an all-stock deal to create the nation’s top private life insurer valued at nearly USD10 billion. The deal is expected to kickstart consolidation in India’s lucrative insurance sector where relatively few people hold insurance policies despite the country being the world’s second-most populous nation of 1.3 billion.

Standard Life has said that Indian mortgage lender Housing Development Finance Corp, which currently owns a majority of HDFC Life, believes that the scheme of arrangement submitted to Insurance Regulatory and Development Authority of India (IRDAI) complied with all applicable laws. The companies, which filed an application for IRDAI’s in-principle approval for the scheme in September, propose to make suitable representations to the regulator, Standard Life said.

The current terms of the deal involve Max Life being merged into its parent company Max Financial Services, which in turn would combine its entire life insurance business with HDFC Life. Analysts said regulators were likely to be focusing on the logistics of having an insurer merger with a non-insurer. The deal is set to give Max Financial Services’ shareholders 2.33 shares of HDFC Life for every Max Financial share held.