MNYL valued at Rs 10,504 crore (US $ 2.1 billion [1])
2nd largest Foreign Investmentinthe
IndianLife Insurancesector
MS&AD attracted by profitable growth, superior performance
and increasing market share of MNYL
MS&AD is the 7th largest non-life Insurance company
globally, with a market cap of USD 12.6 bnand over
100 years history
MNYL's brand name to be revised to 'Max Life
Insurance Company' - a Max India and MS joint
venture
12th April 2012 New Delhi In a development that
reflects the growing interest in high quality life
insurance companies in India, MS&AD Insurance Group
Holdings, a Japan headquartered global insurance
powerhouse, is buying[2]
26% stake in Max New York Life (MNYL), India's 4th
largest private life insurance company.
In an all cash transaction, MS&AD will pay Rs 2,731 crore
(US $ 535 million) for the stake, making it the 2nd largest
foreign investment in the Indian Life Insurance sector. The
transaction values MNYL at Rs 10,504 crore (US $ 2.1
billion). The consideration offered by MS&AD reflects the
strong confidence in MNYL and its superior performance, as
demonstrated in 2011 when MNYL's standing rose from 7th
to 4th position in the Indian Private Life Insurance league
tables, gaining 247 basis points market share in a highly
competitive space. Post transaction, Max India's
majority stake of 70% will remain unchanged.
As a result of this transaction, Max India will get a net
cash flow of Rs 802 crore (US $ 157 million). This reflects
the instrumental role Max India has played as the majority
partner since the inception of MNYL in developing the
company not only as a top quartile player in the life
insurance industry but more importantly as an organization
that is looked up to as a benchmark by its peers in
critical aspects such as a high quality agency model,
customer retention and service quality.
After this transaction, the company will be rebranded Max
Life Insurance Company[3],
further strengthening the trust and consumer confidence in
the Max India brand. The joint relationship with MS will
also be highlighted in all the communication.
Announcing the transaction, Mr Analjit Singh, Chairman, Max
India Limited, said, "The last decade of building
MNYL, along with our joint venture partner New York Life,
into a strong, independent, Board governed company, with
loyal customers and satisfied employees and agents, has
been an exciting and enriching journey. We appreciate our
valuable partnership with New York Life and what we have
been able to accomplish together.For the next stage of
MNYL's growth and development, we view MS&AD as an
ideal partner. They are a financially sound and respected
player with a strong international business and strategic
aspirations to participate in the growth of life insurance
business in India. More importantly, they are aligned with
our existing strategy."
According to Mr. Rahul Khosla, Managing Director, Max India
Limited, "MNYL is the most profitable business in Max
India's portfolio and forms about 80% of group revenue.
Given this, the deal provides the right direction for
market valuation of Max India's stock. The cash
generated from the arrangement will enable Max India to
invest in growth opportunities and reward
shareholders."
Rajesh Sud, CEO & Managing Director, Max New York Life,
said, "We are delighted that a well renowned and
experienced insurance group like MS&AD with a strong
international business will be our partner in the next
phase of our growth. As a financially strong and well run
life insurance business which has completed 10 successful
years and is widely acknowledged for its leadership,
quality of business, strong culture and employees &
management stability, we look forward to further
strengthening our position in the Indian market. From a
consumer standpoint, the transition will be seamless and we
remain strongly committed to our strategy of serving the
long term savings and protection needs of our customers
through a high quality agency and multi-channel
distribution." He added, "MNYL has a Solvency
Ratio of 539% as on 31st December 2011, which is
significantly above the statutory requirement of 150%. Its
current Assets under Management are over Rs 17,000
crore."
MS&AD, which had identified entry into the high potential
Indian Life Insurance sector as a part of its growth
strategy, will get a head start in the form of a
substantial stake in a top quartile Indian life insurer
with strong fundamentals. MS&AD is the world's 7th
largest non-life insurance group, with a market cap of US $
12.6 billion. Speaking on the occasion, Yasuyoshi Karasawa,
President, Chief Executive Officer, Mitsui Sumitomo
Insurance Co. Ltd., said "Max India is one of
India's most admired companies with a well recognized
brand and a deeply experienced management team. MNYL is the
best possible life insurance company that we could have
partnered with for our entry into the Indian Life Insurance
space with its life insurance focus, a balanced
distribution and product mix, robust corporate governance
practices and a strong & committed management
team."
Michael Sproule, Executive Vice President and Chief
Financial Officer of New York Life Insurance Company, said,
"New York Life and Max India have created significant
value and we're very proud of the strong company
we've created together and the policyholders we serve.
Over the long term, the partners' view has been that
the local partner, Max India, is best suited to have
greater governance oversight and operating responsibility
to oversee the company. Given this view on governance
and the fact that the amount paid is consistent with recent
transactions, and all parties are comfortable with the
value, New York Life believes this is a good time to exit
the joint venture and allow the new strategic business
model to take shape. India remains a vibrant and attractive
market for life insurance and we wish Max India and MS&AD,
a high quality and very experienced global insurance
company, tremendous success for their venture
together."
Max India had engaged Goldman Sachs as its financial
advisor on the transaction while Citi advised MS&AD and
Mitsui Sumitomo Insurance.
About Max New York Life ( www.maxnewyorklife.com)
Max New York Life Insurance, incorporated in 2000, is one
of India's leading private life insurance companies.
The company offers life insurance solutions for long-term
savings and protection to over 3 million customers. It is
amongst the top 4 private life insurers in India with 8.6%
market share[4] of the
private life insurance market.
In the tumultuous period between January and December 2011,
when the private insurance industry suffered a 36% decline
in sales 3, MNYL had a marginal decline in its year-on-year
performance and improving its market share by 247 points
with new business acquisition being amongst the best in the
industry.
MNYL posted statutory profits of Rs 283 crore for the
Financial Year ended March 2011 and of Rs 572 crore for the
nine months ended December 2011. It currently has
over Rs.16,836 crore of Assets under Management.
About Max India ( www.maxindia.com)
Max India Group is a multi-business corporate, driven by
the spirit of enterprise and focused on people and service
oriented businesses. The Company is headquartered in New
Delhi, India. Max India is in the 'Business of
Life' with its vision to be one of India's most
admired corporates for Service Excellence. It 'Protects
Life' through its Life Insurance subsidiary Max New
York Life; 'Cares for Life' through its Healthcare
company, Max Healthcare, a joint venture between Max India
and Life Healthcare, South Africa; 'Enhances Life'
through its Health Insurance company, Max Bupa Health
Insurance, a joint venture between Max India and Bupa
Finance Plc., UK; and 'Improves Life' through its
Clinical Research business, Max Neeman, a fully owned
subsidiary of Max India. From its past, Max India continues
its interest in manufacture of Speciality Products for the
packaging industry.
For the Calendar Year 2011, Max India Group recorded a
consolidated turnover of nearly Rs. 780 billion. The
Group's businesses have built commanding presence in
their respective sector through a total customer base of
nearly 5 million, over 500 offices spread across India and
a people strength of 57,000 persons as on 31st Dec
2011.
The flagship company Max India Limited is a widely held
public ltd company and is listed on the BSE and the NSE.
The company is led by Analjit Singh who holds 37% stake and
has as its shareholders, some of world's best
Institutional Investors such as Goldman Sachs, Fidelity,
IFC, First State and Temasek.
About MS&AD ( www.ms-ad-hd.com)
The MS&AD Insurance Group, which is based in Japan, was
established in April 2010 as a result of business
integration among Mitsui Sumitomo Insurance Group, Aioi
Insurance and Nissay Dowa General Insurance. Today, with
presence in over 41 markets globally, 17 of which are in
Asia, MS&AD Insurance Group is the seventh largest general
insurers in the world. The Group also received the
'General Insurance Company of the Year' award from
Asia Insurance Review in 2011. Through its subsidiaries and
associated companies in both domestic and overseas markets,
MS&AD Insurance Group is active in five business domains,
namely domestic non-life insurance, domestic life
insurance, overseas, financial services and risk-related
businesses. MS&AD Insurance Group has strong experience and
an extensive track record in the area of life insurance
through its subsidiaries Mitsui Sumitomo Aioi Life and
Mitsui Sumitomo Primary Life. For the fiscal year ended
March 31, 2011, MS&AD Insurance Group had consolidated net
premiums written of 2,541.4 billion yen and consolidated
total assets of 11,445.0 billion yen.
Mitsui Sumitomo Insurance is a core subsidiary of the MS&AD
Insurance Group, offering high-quality insurance products
and risk management services through a nationwide domestic
network of approx. 650 sales branch offices and more than
40,000 agents. Mitsui Sumitomo Insurance also carries out
overseas businesses, centered on the fast-growing Asian
region, making full use of over 50 years' experience of
international operations.
About New York Life
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