A high-profile merger in the insurance sector could ignite deal activity, but legal and regulatory labyrinths harbour many unknowns. Amitabh Lal Das explains

The last wave of intense M&A activity in India’s life insurance sector can be traced back to 1956 when, in the wake of nationalization, Life Insurance Corporation of India absorbed 245 Indian and foreign insurers.

The announcement last year of a merger between two of India’s top four insurers could trigger the next wave of consolidation. In the intervening period, particularly after the entry of private players since 2000 and the increase in foreign direct investment limits from 26% to 49% in 2015, the life insurance industry in India witnessed a flurry of transactions, largely in the form of joint venture formations between Indian and foreign insurers and attendant investments or stake purchases by one foreign insurer of another.

The current deal was rated by VCCircle as the second-largest M&A deal in terms of value in India in 2016. In an industry where most of the 24 private life insurers are struggling, this mega-merger is expected to pave the way for further alliances in the life insurance sector, which will inevitably lead to more M&A action.


The legal and regulatory framework for M&A in the life insurance sector is contained in sections 35 to 37A of the Insurance Act, 1938, and the Insurance Regulatory and Development Authority (Scheme of Amalgamation and Transfer of Life Insurance Business) Regulations, 2013 (amalgamation regulations). Additionally, under the Competition Act, 2002, the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (combination regulations), and chapter XV of the Companies Act, 2013, schemes of amalgamation, transfers and arrangement will require approval by the Competition Commission of India (CCI) and the National Company Law Tribunal (NCLT). Approvals from other regulators such as the Securities and Exchange Board of India, the Reserve Bank of India and the Foreign Investment Promotion Board may also be required.

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AMITABH LAL DAS is the director and head of legal, compliance, regulatory and corporate governance at Max Life Insurance Company. The views expressed those of the author and do not represent the views of the company.