Axis Bank will increase its stake in Max Life Insurance Company (MLIC), a joint venture life insurance firm in which it holds a 2 per cent stake. The board of directors of Max India on Friday gave its approval for Axis Bank to increase its stake in MLIC. 

Besides Axis Bank, the other stakeholders in the joint venture are Max India (72 per cent) and Mitsui Sumitomo Insurance Company (26 per cent). Indications are that there would only be a minor increase in stake and the post-transaction holding for the bank would still be lower than 5 per cent.  This is being done to strengthen Max India’s partnership with Axis Bank, said a Max India spokesperson when contacted. 

Axis Bank is currently a bancassurance partner and distributes MLIC’s products through its branch network. 

No clarity on mode

There is however, no clarity yet on how Axis Bank would get to increase its stake — whether MLIC would issue fresh shares or the stake would be purchased from Max India. 

Nothing is finalised yet, sources said, adding that the details of the agreement have to be worked out. 

When contacted, an MLIC spokesperson confirmed that the private life insurer was fully capitalised, enjoyed high solvency margins and was not in need of fresh capital now to fund business growth. 

In May 2010, Max New York Life Insurance had entered into a 10-year strategic bancassurance tie-up with Axis Bank.  As a symbol of commitment to Axis Bank, Max India had then allowed the lender to pick a 4 per cent stake in the private life insurer. In May 2011, Axis Bank had acquired 4 per cent stake from Max India in its joint venture Max New York Life Insurance Company for ₹72 crore. 

However, Axis Bank has reduced its stake to 2 per cent in recent years. 

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