NY Life exits Max JV
Japan buys NY Life’s stake in India JV firm for 2,731cr
US- based New York Life on Thursday announced its exit from Indian life insurance joint venture Max New York Life ( MNYL) by selling its 26 per cent stake to Japan’s MS& AD, a deal seen as the second largest deal in the insurance sector.
Max New York Life, India’s fourth largest private life insurance company was a joint venture between Max India and New York Life. Post transaction, Max India’s majority stake of 70 per cent will remain unchanged. The transaction values MNYL at ` 10,504 crore ($ 2.1 billion).
As per the existing regulation, a foreign partner can hold only up to 26 per cent stake in an insurance JV. After this transaction, the company will be rebranded Max Life Insurance Company.
“During their JV period of ten years, the partners opined that the local partner, Max India, is best suited to have a greater governance oversight and oper- New York Life would sell its 26 per cent stake in Max New York Life Insurance Company — a joint venture with Max India — to Japan’s Mitsui Sumitomo. Post the deal, the insurer name would not reflect the foreign partner’s name. ating responsibilities to look after the company.
Given the fact that the amount paid during recent transactions has been consistent and all parties have been comfortable with the value, New York Life believes that this is a good time to exit the JV and allow the new strategic business model to take shape,” said Michael Mitsui Sumitomo was interested in entering the Indian market and had made an unsolicited offer to New York Life eight or nine months ago. The US firm decided to exit to focus on the United States and Mexico. Sproule, executive vicepresident and CFO of New York Life Insurance Company. New York Life had recently sold businesses in China, Thailand, South Korea and Hong Kong.
This is the second largest deal in the Indian insurance sector after Reliance Life had sold 26 per cent of its stake to another Japanese insurer Nippon Life at about ` 3,062 crore last year. MS& AD Insurance Group, Japan’s largest property- casualty insurer by revenue, is one of the insurers expanding aggressively in Asia through acquisitions and buying of both life and non- life assets to secure growth beyond its weak home market. MS& AD Insurance Group was established in April 2010 as a result of business integration among Mitsui Sumitomo Insurance Group, Aioi Insurance and Nissay Dowa General Insurance.
The transaction was based in such a way that Max India would get a net cash flow of ` 802 crore ( $ 157 million). According to the deal, New York Life would sell 16.63 per cent of its holding to Mitsui Sumitomo Insurance . The remaining 9.37 per cent would be sold to Max India for ` 182 crore. Max India would then sell this stake to MSI for ` 984 crore. MS& AD is the world’s seventh largest non- life insurance group.