MS&AD Insurance Group Holdings to acquire 26% stake in MNYL

MNYL valued at Rs 10,504 crore (US $ 2.1 billion[1])
2nd largest Foreign Investment
in the Indian Life Insurance sector
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 bn
and 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

New York Life Insurance Company, a Fortune 100 company founded in 1845, is the largest mutual life insurance company in the United States* and one of the largest life insurers in the world. New York Life has the highest possible financial strength ratings currently awarded to any life insurer from all four of the major credit rating agencies: A.M. Best (A++), Fitch (AAA), Moody’s Investors Service (Aaa), Standard & Poor’s (AA+).** Headquartered in New York City, New York Life's family of companies offers life insurance, retirement income, investments and long-term care insurance. New York Life Investments*** provides institutional asset m anagement and retirement plan services. Other New York Life affiliates provide an array of securities products and services, as well as retail mutual funds. Please visit New York Life's Web site at www.newyorklife.com for more information.

For further information, please contact:

Nitin Thakur
Max India
nthakur@maxindia.com
Mobile: +91 9873347428

Keiichi Sato
Mitsui Sumitmo Insurance
keiichi-sato@ms-ad-hd.com
Mobile: +81 8011709485

William H. Werfelman
New York Life
william_werfelman@newyorklife.com

Mobile: +1 917 239-0982