HDFC Life To Acquire Exide Life Insurance. Know How The Takeover Will Benefit Policyholders

The proposed transaction will give customers access to a wider bouquet of products and service touch-points.

Representative Photo

New Delhi: In a major announcement impacting insurance subscribers, HDFC Life will acquire Exide Life Insurance for Rs 6,687 crore that will lead to the merging of the entity into HDFC Life.

HDFC Life Managing Director and CEO Vibha Padalkar said the amalgamation can result in value creation for customers, employees, shareholders, and distribution partners.

What’s the announcement?

"HDFC Life will acquire 100 percent stake in Exide Life Insurance from Exide Industries via issuance of 8,70,22,222 shares at an issue price of Rs 685 per share and a cash payout of Rs 726 crore aggregating to Rs 6,687 crore," the company said in a statement. The proposed deal is aimed to boost the growth of HDFC Life's agency business and tap into Exide Life's strong presence in southern cities.

The process for the merger of Exide Life into HDFC Life will be initiated on completion of the acquisition. The entire process, including the acquisition and subsequent merger, is subject to regulatory and other approvals.

What does it mean for customers?

The proposed transaction will give customers access to a wider bouquet of products and service touch-points. Also, existing Exide life insurance policyholders need not have to worry over the acquisition as customers will continue to be managed by Exide Life through its branches, website, app, etc. until the transition is complete. Any issues related to claims, redemptions, renewals, etc will be managed by Exide Life. 

It is expected to boost the growth of the agency business of HDFC Life as Exide Life complements its geographical presence with a strong presence in the South, especially in Tier 2 and 3 towns.

Such transactions usually take less than a year and Exide Life policyholders should receive formal communication from HDFC Life regarding any changes such as transition to HDFC Life website, toll-free numbers, and more. Customers should note that the terms and conditions of the policy remain the same as mentioned in a client’s existing policy document.

Moreover, Exide Life policyholders will get access to other benefits due to the expanded product portfolio available. Besides, good quality, predominantly traditional and protection focussed business, will augment the existing embedded value of HDFC Life by approximately 10 per cent.

The embedded value of Exide Life stands at Rs 2,711 crore as of 30th June 2021 and is reviewed by Willis Towers Watson Actuarial Advisory LLP. HDFC Life’sscale, market-leading digital and product innovation capabilities, and prudent risk management strategy will aid in optimizing cost and over time,  achieve higher margins for the acquired business.

(With inputs from PTI)