Max Financial Services Limited · NSE:MFSL
Max Financial Services — Q1 FY2025 Earnings Presentation
53 slides from Max Financial Services's earnings presentation, Aug 13, 2024
Slide 1: Exchange filing cover letter for Investor Release Q1 FY25
August 13, 2024 BSE Limited National Stock Exchange of India Limited Phiroze Jeejeebhoy Towers Exchange Plaza, Bandra Kurla Complex, Dalal Street Bandra (East) Mumbai – 400 021 Mumbai – 400 051 Scrip Code: 500271 Scrip Code: MFSL Dear Sir/Madam, Sub: Investor Release– Q1 FY 25 Pursuant to Regulation
Slide 2: Max Financial Performance Update
Max Financial Performance Update Investor Release 3M FY25 August 13, 2024 ^Individual Death Claims Paid Ratio as per Audited Financials for FY 2023-24
Slide 3: Section I: 3M FY'25 Key Highlights
SECTION I Max Financial Services and Max Life Insurance : 3M FY’25 Key Highlights
Slide 4: 3M FY'25 Key highlights
3M FY’25 Key highlights ▪ MFSL revenue* excluding investment income at Rs 5,235 Cr, grows 11% in 3M FY’25. Consolidated Profit After Tax at Rs 156 Cr. ▪ Individual Adjusted first year Premium grew by 27% to Rs 1,260 Cr and Total APE# grew by 31% driven by robust NOP growth Revenue of 27%. ▪ Private
Slide 5: Max Life Financial Performance Summary 3M FY'25
Max Life Financial Performance Summary 3M FY’25 Total APE# Gross Written Premium Renewal Premium AUM Rs 1,453 Cr 31% Rs 5,399 Cr 11% Rs 3,323 Cr 10% Rs 1,61,153 Cr 25% [Rs 1,113 Cr] [Rs 4,871 Cr] [Rs 3,014 Cr] [Rs 1,29,127 Cr] Profit Before tax Net Worth Policyholder Cost to Policyholder Expense to
Slide 6: Transaction Update
Transaction Update Current Structure (As of June‘24) Final structure (Post completion of series of transactions step wise details given below) Max Promoter Mitsui Sumitomo Public Max Promoter Mitsui Sumitomo Public 6.5% 21.9% 71.6% 6.5% 21.9% 71.6% Max Financial Axis Max Financial Axis (MFSL) Group*
Slide 7: Section II: Max Life Insurance Business Overview and Financials Update
SECTION II Max Life Insurance – Business Overview and Financials Update
Slide 8: Key Highlights for Max Life FY19-24 (1/2)
Key Highlights for Max Life FY19-24 (1/2) 5-Yr CAGR of 12% on 1 Asset Under Management at Consistent Individual new business1 vs Rs 1.5 lac cr, CAGR leadership 10% for Total life of 19% over position in Consistent Growth insurance industry last 5 years online protection 5-Yr APE CAGR of 5-Yr APE CAG
Slide 9: Key Highlights for Max Life FY19-24 (2/2)
Key Highlights for Max Life FY19-24 (2/2) Employee metrics Great Places to Experienced leadership1 with half of 13th best place Work rank #28 in FY24 the leadership’s for data scientists Among the Top tenure with Max Life of to work for within India 25 in BFSI organisations by Analytics India more t
Slide 10: Industry leading growth in Q1 FY'25 in proprietary channels and segments of choice
Continue to post industry leading growth in Q1 FY’25 fueled by disproportionate growth in proprietary channels & segments of choice Industry leading outcomes Growth in proprietary channels Growth in Segments of choice Individual Adjusted FYP1 Proprietary growth (APE) Retail Protection & Health2 APE
Slide 11: Strong performance on new business
Max Life has delivered strong performance on new business New Business Premiums (on APE1 basis) –Driven by secular growth Renewal Income – Delivering consistent growth Amount in INR Cr Amount in INR Cr 1,453 7,433 18,506 3,323 16,382 6,248 3,014 1,113 FY'23 FY'24 3M FY'24 3M FY'25 FY'23 FY'24 3M FY'
Slide 12: Best in class outcomes consistent with strategy of sales growth
Best in class outcomes consistent with strategy of sales growth Product Mix: Focus on Annuity and Protection & Health Line of Business# 3M FY’24 3M FY’25 Growth PAR Annuity NPAR Savings Protection & Health GROUP ULIP Par 216 209 -3% Annuity 81 82 1% NPAR Savings 388 353 -9% 27% 25% Protection & Heal
Slide 13: Value of New Business (VNB) and New Business Margin (NBM)
Value of New Business (VNB) and New Business Margin (NBM) Value of New Business (VNB) and New Business Margin (NBM) Walk* 75 Amount in INR Cr 247 254 -69 3M FY’24 Impact of higher Change in business 3M FY’25 APE mix and margins NBM 17.5% 22.2% 0.0% -4.7% New Business Margin progression- Q1 margins a
Slide 14: Efficient capital management with profitable growth
Efficient capital management with profitable growth Opex to GWP: Investing towards building distribution Solvency Ratio (Pre-dividend) 17.4% 50 bps 17.9% 203% 190% 188% 14.2% 13.8% 172% 150% Solvency Limit FY'23 FY'24 3M FY'24 3M FY'25 FY'23 FY'24 3M FY'24 3M FY'25 Operating RoEV Underwriting Profit
Slide 15: Max Life Asset Under Management reached INR 1.6 lakh crore
Max Life has consistently grown its Asset Under Management1, reached INR 1.6 lakh crore Assets Under Management - MLI is the 4th largest* manager of private LI AUMs and Largest Par fund2 AUM of ~71K Cr Linked: Healthy mix of Debt and Equity Amount in INR ‘000 Cr Debt Equity Linked Traditional 151 16
Slide 16: Max Life recognised by Indian and foreign business bodies
Max Life has been recognised by a number of Indian and foreign business bodies for its excellence in business, customer service and focus on people Business Excellence Leaders in Quality Focus on People ▪ Awarded Excellence in driving distribution ▪ Accorded the Laureate honor by Great Places throug
Slide 17: Section III: Max Life Insurance Strategy
SECTION III Max Life Insurance – Strategy
Slide 18: Max Life's Strategic Thrust Areas and progress made
Max Life’s Strategic Thrust Areas and progress made A B C D Predictable & Sustainable Digitalto Product innovation Customer centricity across the value Digitization for efficiency and growth drive margins chain intelligence ▪ Fastest growing profitable ▪ Leader in Protection + Health & Wellness ▪ Im
Slide 19: Growth in Proprietary and Bancassurance channels
A Max Life has focused on ensuring growth in both its Proprietary and Bancassurance channels Channel Mix – Disproportionate focus towards growing proprietary channels Proprietary Channels New Business (APE)* Proprietary Bancassurance Others Amount in INR Cr 1% 2% 2% 2% 717 2,957 2,307 448 48% 62% 58
Slide 20: Key Enablers: Axis emerging verticals and agency new models
Rapid scale up at Emerging verticals at Axis Bank and New Models at Agency contributing A towards overall sales1 growth Axis - Emerging vertical1 Agency – New models1 Sales Q1FY24 Q1FY25 Q1 FY'24 Q1 FY'25 ▪ New models within agency scaling up rapidly and contributing >5% of ▪ 37% YoY growth in Q1 fr
Slide 21: Improved productivity and digital capabilities in proprietary channels
A Improved productivity & leveraging digital capabilities has led to robust growth in proprietary channels 1 Agency 2 Direct Sales Force 3 E-commerce Agency sales driven by higher mix Focus on high margin products Launched a Flexi Cap Fund to for of NPAR Savings, Annuity & resulted in doubling of Pr
Slide 22: Distribution expansion with 7 new partnerships in 3M FY'25
A Max Life has been augmenting its distribution capability by expanding both traditional and emerging ecosystems with 7 new partnerships in 3M of FY’25 Ecosystems Key partners signed by Max Life FY’24 3M FY’25 Bancassurance Corporate Agents Online/Offline Brokers & others Group Credit Life* Coracle
Slide 23: Product mix in proprietary and Bancassurance channels
A Product mix in proprietary and Bancassurance channels aligned to customer needs Proprietary Channels Product mix – ULIP driven by E-commerce as Bancassurance Product Mix compared to Agency & Direct with higher NPAR Savings and Annuity in mix PAR Annuity NPAR Savings Protection & Health ULIP PAR An
Slide 24: Product innovation with first-in-industry propositions
Max Life has been at the forefront of driving Products Innovation by creating first-in-industry B propositions 1. Break the endowments category clutter with 6. Enabled transparent customer participation in 10. Hedged Guarantees with Derivatives Industry First Whole Life plan Bonds with First Index-L
Slide 25: Accelerating product innovation agenda
Accelerating product innovation agenda through experiments and creating new customer B segments Benefits to cater to need of death, Industry first design of guaranteed Option to get back all premiums paid Health & Savings endowment back at no cost. Secure Earnings & Wellness Max Life SWAG Elite Plan
Slide 26: Complete suite of products
B Max Life has a complete suite of products and focus is on selling longer term products along with improving penetration of pure protection & Health offerings Average Policyholder Age Average Policy Term Average PPT Max Life has products across all categories Product Type (Years) (Years) (Years) En
Slide 27: Focus on retirement ecosystem
B Focus on development and growth of retirement ecosystem Life stage & Age: 25-45 yrs Age: 45-60 yrs Age: 60+ yrs Objective Accumulate funds Plan for retirement Cover the risk of living too long ▪ Tax Saving ▪ Tax Saving ▪ Lump-sum req. for big events (child’s ▪ Regular income stream until death Nee
Slide 28: Understanding customer to drive protection sales and risk management
B Focus is on understanding the customer to drive protection sales and its efficient risk management Awareness & Ownership Gap for Term Products^ Total Protection and Health APE Retail Protection and Health APE Amount in INR Cr Amount in INR Cr 2.1x 1.6x 70 318 64 156 47 241 199 102 30 31 75 21 IPQ
Slide 29: Managing Other Major Risks
B Managing Other Major Risks Information Security and Interest Rate Risks Investment Risks Operational Risks Business Continuity Risks Robust Asset Liability Front Office – Led by CIO: ▪ Cyber DARE framework for Preventive Programs: Management Framework: ▪ Differential strategy as per the managing s
Slide 30: Robust Asset Liability Management (ALM) framework
Robust Asset Liability Management (ALM) framework Max Life ALM framework Willis Towers Watson Opinion on Asset Liability Management of Max Life • ALM Approach • Scope covered non-participating asset and liability portfolio. WTW • Cash Flow Matching and Dollar duration matching tested a range of poss
Slide 31: Customer measures and persistency
C Strong focus towards customer measures has helped deliver superior performance across health parameters and will continue to remain an important priority Persistency# (Premium)- Improvement across the cohort NPAR Customers opting for continuation of their policy1 84% 87% 2M FY24 2M FY25 Policies c
Slide 32: Launched next generation claims system TEJAS
C Launched next generation claims system, ‘TEJAS’, to maintain our best in industry claims settlement Claims Paid Ratio Rank#1 Rank#1 Rank#1 Rank#1 Rank#1 99.65% 99.51% 99.35% 99.34% 99.22% 98.74% FY'19 FY'20 FY'21 FY'22 FY'23 FY'24 Next generation Claims System Functional & System Employee & custom
Slide 33: Our Digital Strategy is Based on 6 Key Pillars
Our Digital Strategy is Based on 6 Key Pillars Scale Frictionless Digital Sales – Digital Customer E-Commerce Onboarding/ Bancassurance & Service Business Issuance Partnerships of future 1 2 3 4 Pervasive Intelligence (AI/ML & Analytics embedded in all key processes) 5 Agile, Scalable, Resilient Tec
Slide 34: Max Life Leader in E-Commerce Protection Sales
1 Max Life Leader in E-Commerce Protection Sales SHARPER PROSPECTING PERSONALIZATION EMBEDDED INTELLIGENCE Chase Value not Traffic Never Ask Again Automated 100% call quality monitoring and agent effectiveness assessment via Speech AI Engine - VoX Near real time customer call insights to drive conve
Slide 35: Best-in-Class On-boarding Platform
2 Enabled by Best-in-Class On-boarding Platform B2C & B2B ON-BOARDING SMARTER CHASE FRICTIONLESS ONBOARDING PLATFORM Talk to customer the way they like 11:30 AM Journey Smarts WhatsApp for Business to chase in- State of the art Integration stack with funnel prospects third parties like Credit bureau
Slide 36: Building Digital Agency and Banca partnerships of future
3 Focusing on building a Digital Agency and Banca partnerships of future Digital Agency Banca Partnerships UNIFIED LEARNING SALES GENIE ALTERNATE Integration Super App for D2C JOURNEY & TRAINING (SHAPER Smart Fixed Return CHANNELS (including Marketplace SALES Force Plan CAT Axis) >90% MANAGEMENT PRO
Slide 37: Delivering Superior Customer Service Experiences
4 Delivering Superior Customer Service Experiences Website Mili Self Servicing Max Life Assistant EMBEDDED INTELLIGENCE 12:10 PM 12:15 PM Impact-Max – ECS hit prediction model to drive 2% incremental ECS collections (250Cr) Proactive Surrender retention & customer engagement models (surrender outflo
Slide 38: Leveraging Generative AI for competitive advantage
5 And leverage Generative AI for competitive advantage we have identified 4 key areas, and are working on Creating Enterprise solutions and Business Teams enablement 1. Sales Enablement 2. Customer Service 3. Employee Experience Enterprise Grade use case development Enterprise Grade use AI Driven Ro
Slide 39: Agile, Scalable and Resilient Technology Platform
6 We are building a Agile, Scalable & Resilient Technology Platform to Digitally power Max Life Data & Analytics Platform Compliance & Security Cloud Foundation Legacy Modernization BitSight Security Maturity Score: 75% on hybrid, multicloud architecture 1st organization in India & Lakehouse archite
Slide 40: Section IV: Max Life Insurance ESG
SECTION IV Max Life Insurance – ESG
Slide 41: Four pillars of our sustainability framework (1/3)
Four pillars of our sustainability framework (1/3) Investors Communities ly Ca eopl ab SustWork P re e ain for Regulators resp ESG Distribution Partners io n s Finaonsib p e ee n ra t nci ilit Gr al y O Customers Employees Investor Release 40
Slide 42: Four pillars of our sustainability framework (2/3)
Four pillars of our sustainability framework (2/3) Work Ethically & Sustainably Care for People Financial Responsibility Green Operations Corporate Governance Diversity & Inclusion Sustainable Investing Waste Management Ethics & Compliance Employee Development Product responsibility Water Management
Slide 43: Four pillars of our sustainability framework (3/3)
Four pillars of our sustainability framework (3/3) Work Ethically & Sustainably Work Ethically & Sustainably Financial Responsibility Green Operations Governance Diversity & Inclusion Committed to responsible Energy Management Gender diversity ratio at 27.1% at Home Office HO-DLF building is a Diver
Slide 44: Accomplishments in key strategic shifts in ESG journey
Accomplishments in our key strategic shifts identified in our ESG journey Indicators Key Metric for ESG Indicators Key Targets Current Status Digital Digital penetration 95% of digital penetration by FY 90% self-service enablement by Operations 2026 June 2024 Diversity & Overall gender diversity rat
Slide 45: Annexures
> _o ANNEXURES a
Slide 46: Expansion in case size and number of policies sold
Expansion in both case size and number of policies sold in 3M FY25 Case Size (INR’000) NoP’s (000’s) Par Annuity NPAR Savings Protection & Health ULIP Par Annuity NPAR Savings Protection & Health ULIP 151 102 715 103 94 90 153 163 165 118 44 144 597 153 116 20 27 34 34 28 189 134 110 147 46 102 36 1
Slide 47: Compounded growth in Embedded Value
Embedded Value has grown by 4.4x in last decade despite pandemic demonstrating quality of our book and built in prudence Compounded growth in Embedded Value Amount in cr 4.4x 10,418 418 23,336 (548) (303) 19,494 (2,988) 8,099 4,401 Value of new Change in Accumulated EV COVID Non-Operating Dividends
Slide 48: Sensitivity analysis as at 31st March 2024
Sensitivity analysis as at 31st March 2024 EV Value of New Business New Business Margin Sensitivity Value (Rs Cr) % change VNB (Rs Cr) % change NBM % % change Base Case 19,494 - 1,973 - 26.5% - Lapse/Surrender - 10% increase 19,644 0.8% 1,961 (0.6%) 26.4% (0.1%) Lapse/Surrender - 10% decrease 19,324
Slide 49: Definitions of the EV and VNB
Definitions of the EV and VNB Market consistent methodology ▪ The EV and VNB have been determined using a market consistent methodology which differs from the traditional EV approach in respect of the way in which allowance for the risks in the business is made. ▪ For the market consistent methodolo
Slide 50: Components of VIF (1/2)
Components of VIF (1/2) Present Value of Future Profits (PVFP) ▪ Best estimate cash flows are projected and discounted at risk free investment returns. ▪ PVFP for all lines of business except participating business is derived as the present value of post-tax shareholder profits from the in-force cov
Slide 51: Components of VIF (2/2)
Components of VIF (2/2) Time Value Of Options and Guarantees (TVFOG) ▪ The TVFOG for participating business is calculated using stochastic simulations which are based on 5,000 stochastic scenarios. ▪ Given that the shareholder payout is likely to be symmetrical for guaranteed non-participating produ
Slide 52: Key Assumptions for the EV and VNB (1/2)
Key Assumptions for the EV and VNB (1/2) Economic Assumptions ▪ The EV is calculated using risk free (government bond) spot rate yield curve taken from FBIL1 as at June 2024. The VNB is calculated using the beginning of respective quarter’s risk free yield curve (i.e. 31st March 2024). ▪ No allowanc
Slide 53: Key Assumptions for the EV and VNB (2/2)
Key Assumptions for the EV and VNB (2/2) Expense and Inflation ▪ Maintenance expenses are based on the recent expense studies performed internally by the Company. ▪ Future CSR related expenses have been taken to be 2% of post tax (risk adjusted) profits emerging each year. ▪ The commission rates are
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