New Delhi: Axis Bank, and Max Financial Services Limited on Thursday signed a confidentiality and exclusivity arrangement to explore the possibility of the private sector lender entering a long-term strategic partnership with Max Life Company Limited.
Max Life is currently India's largest non-bank owned private life insurer, in which Max Financial Services holds a 72.5% stake, the companies said in a joint statement to the exchanges. Mitsui Sumitomo Insurance and Axis Bank hold 25.5% and 2.0% stake respectively.
Axis Bank is Max Life’s largest source of revenue at 54% and the proposed deal with the lender will eliminate the uncertainty about a bancassurance partner for the insurer.
Bancassurance deals are struck with banks so that cash is set off in the form of future commission income that they will earn. It is the most sought after distribution channel for insurance companies because of its relatively low cost.
Axis Bank and Max Life have had a successful bancassurace arrangement for nearly a decade. The new premium generated through this arrangement has aggregated to over ₹12,000 crore over this period, while maintaining high persistency, according to the statement.
"The proposed long-term partnership between Axis Bank and Max Life is a natural evolution of what has been a highly productive and mutually beneficial affiliation. It will infuse fresh impetus into the teams in both companies and will motivate them to serve customers effectively and efficiently," said Mohit Talwar, vice chairman, Max Group and managing director, Max Financial Services.
Max’s life insurance business saw gross written premiums increase 14.6% year-on-year increase in FY19, driven by a 24.5% rise in first-year premiums. It had a market share of 9% among private companies and 6% overall in the September quarter.
Axis Bank is India's third largest private sector bank in India and offers the entire spectrum of services to customer segments covering large and mid-corporates, SMEs, agriculture, and retail businesses.