Max Financial Services Limited · NSE:MFSL
Max Financial Services — Investor Presentation (February 2019)
47 slides from Max Financial Services's investor presentation, February 2019
Slide 1: Max Financial Services Limited Investor Presentation February 2019
Max Financial Services Limited Investor Presentation February 2019
Slide 2: Max Group Vision
Max Group Vision “To be the most admired corporate for service excellence” • Positive social impact • Culture of Service Sevabhav • Helpfulness • Mindfulness • Expertise • Entrepreneurship Excellence • Dependability • Business performance • Transparency • Respect Credibility • Integrity • Governance
Slide 3: Evolution of Max Group—Strong history of entrepreneurship
Evolution of Max Group—Strong history of entrepreneurship and nurturing successful businesses NYL exits and JV with Max India demerged into Fund raising ~ USD 360 Mn MSI in 2012 3 listed hold cos Enters Telecom in JV ● QIP- USD 156 Mn in 2007 ● MSI is world’s 7th largest with Hutchison ● Warburg Pin
Slide 4: Max Group – Corporate Structure
Max Group – Corporate Structure Max Group - Sponsors 28.4% 41.0% 47.2% Companies Holding Life Insurance Health & Allied Real Estate, Manufacturing & Business Business Other businesses 50% 51% 71.49% Companies Operating 51% 100% 100% 100% 100% Group CSR Arm Sponsors stake in Max Group holding compani
Slide 5: Max Group – Senior Management
Max Group – Senior Management Rahul Khosla • Group President • Chairman, Max India Limited • Executive President, Max Financial Services • Chairman, Max Healthcare Institute Ltd Mohit Talwar Prashant Tripathy • Managing Director, Max India Limited • Managing Director & CEO, Max Life Insurance • Mana
Slide 6: Max Group Overview
Max Group Overview 1 USD 3 billion Revenues… 11 Mn Customers… 25,000 Employees… ~70,000 Agents 2 Strong growth trajectory even in challenging times; a resilient & diversified business model 3 Steady revenue growth and cost rationalization leads to strong financial performance 4 Well established boar
Slide 7: Max Group: Continues to grow from strength to strength
Max Group : Continues to grow from strength to strength Group Revenue (USD Mn) 2,946 2,584 1,915 2,190 1,639 FY'14 FY'15 FY'16 FY'17 FY'18 Group EBITDA (USD Mn) 127 129 95 110 81 FY'14 FY'15 FY'16 FY'17 FY'18 Note: Adjusted for one-offs for conversion assumed 1 USD = INR 65 7
Slide 8: High pedigree of long term investor base
High pedigree of long term investor base Shareholding concentrated with Marquee Investors ▪ KKR ▪ Baron Emerging Market Fund Shareholding Pattern as on 31st Jan 19 ▪ Aberdeen ▪ Vanguard Public 10.8% ▪ Eastspring Promoter 28.4% ▪ Jupiter FII- Others ▪ Norway Government Pension Fund 23.4% ▪ TVF (First
Slide 9: Max Life Insurance Company Limited
Max Life Insurance Company Limited
Slide 10: Key Summary Messages
Key Summary Messages Indian Life Insurance Industry has evolved rapidly; significant headroom still 1 available for growth due to low penetration and favorable demographic profile Max Life is well positioned to leverage this opportunity with its eminent Board, 2 strong management team and robust gov
Slide 11: Overview of Life insurance industry in India
Overview of Life insurance industry in India Phase 1 Phase 2 Phase 3 Joyful Entry (2001-2003) Expansion (2004-2008) Discovering New Normal (2009 onwards) 57% 56% 54% 50% 52% 52% 49% 46% 36% 37% 38% 38% Ind. Adj. FYP (First Year Premium) 34% (In Rs 000 Cr) Private market share in 25% terms of Ind. Ad
Slide 12: Industry Landscape (9M FY'19): Max Life recorded strong growth
Industry Landscape (9M FY’19): Max Life recorded strong growth (+20%) as compared to Industry growth (+8%) and Private growth (11%) YoY Growth basis Individual Adjusted FYP FY’17 FY’18 9M’ FY18 9M’ FY19 Private Industry YoY growth 26% 24% 33% 11% Industry Max Life 25% 25% 25% 21% 20% 19% 18% 8% 65 b
Slide 13: Significant potential to expand in savings and protection segment
Significant potential to expand both in savings and protection segment Life Insurance Penetration (Premium as % of GDP), 2017 Level of Protection (Sum Assured as % of GDP), 2015* 17.9% 260% 14.6% 226% ~ 16% ~ 10 Bps increase increase from 2016 149% from 2016 6.6% 6.3% 96% 76% 2.7% 2.8% China India S
Slide 14: Highly experienced and versatile Board of Directors
Highly experienced and versatile Board of Directors providing strong and secure foundation Founder and Chairman Founder and Chairman of Max Seasoned business manager with Chairman Emeritus India. Awarded with highest wide domain expertise built over civilian honor, the Padma Bhushan Mr. Rahul Khosla
Slide 15: Executive Management team with rich experience of insurance
Executive Management team with rich experience of insurance and strong Governance Mechanism Prashant Tripathy ▪ Total Experience: 23 years (Tenure at Max Life) Max Life Management Team Managing Director & CEO ▪ Previous Organizations: Tata Steel, GE (11 Years) V Viswanand Manik Nangia Aalok Bhan Jos
Slide 16: Long Term strategy driven by vision to be Most Admired Life Insurance Company
Long Term strategy is driven by our vision to be the “Most Admired Life Insurance Company” What are we known for » Quality of advice » Human Capital and Leadership depth To be the most admired life insurance company by securing the financial future of our customers » Differentiated distribution capa
Slide 17: Our Strategy: Strengthen multi-channel architecture and leverage technology
Our Strategy: Strengthen multi-channel architecture and leverage technology to continue profitable growth 1 ▪ Superior financial performance with profitable growth Continue to chase profitable growth ▪ Balanced product mix with focus on long term saving and protection proposition ▪ Superior customer
Slide 18: Financial Performance Summary 9M' FY19
1 Financial Performance Summary 9M’ FY19 Pvt Market Share Individual APE Gross Written Premium AUM 21% 9% 65 bps Rs 2,269 Cr Rs 9,054 Cr 15% Rs 58,397 Cr 16% [8%] [Rs 1,872 Cr] [Rs 7,852 Cr] [Rs 50,333 Cr] Profit Before tax Net Worth Policyholder Cost to Policyholder Expense GWP Ratio to GWP Ratio R
Slide 19: Delivering consistent growth in top line and renewals
Delivering consistent growth in top line and renewals coupled with driving cost efficiencies Financial Performance FY 17 FY18 9M FY18 9M FY19 22% 3,248 21% 2,657 2,269 Individual APE 1,872 15% 14% 7,114 8,152 5,214 5,956 Renewal Premium 16% 12,501 15% 9,054 10,780 7,852 Gross Premium Policyholder ex
Slide 20: Healthy and consistent profitability while maintaining solvency
Healthy and consistent profitability creating value to all the stakeholders while maintaining solvency above required levels Figures in Rs. Cr. Financial Performance FY 17 FY18 9M FY18 9M FY19 20% 4% Profit(before Tax) 768 615 390 375 18% 16% 44,370 52,237 50,333 58,397 AUM 140 bps 240 bps New Busin
Slide 21: Assets under management- Y-o-Y growth at 16%
Assets under management- Y-o-Y growth at 16% Rs in Cr Linked fund vs Controlled fund Debt vs Equity Debt portfolio exposure to AAA rated debt is well above the regulatory requirement of 75% Investor Release 21
Slide 22: Balanced product mix with enhanced focus on long term saving and protection
Balanced product mix with enhanced focus on long term saving 1 and protection contribution PAR Individual Protection Group Protection Non PAR- Savings ULIP 30% 41% 37% 40% 9% 3% 4% 7% 8% 6% 8% 4% 4% 9% 5% 8% 4% 12% 4% 6% 54% 43% 46% 42% FY 17 FY 18 9M' FY 18 9M' FY 19 Product mix basis total APE (in
Slide 23: Focus on Protection
Focus on Protection 1 76% increase in individual protection APE and 57% increase in individual protection policies, 29% of total individual policies are protection Figures in Rs. Cr. Figures in ‘000. Total APE (Individual + Group) No of Protection Policies (Individual) 282 256 131 189 120 171 93 85
Slide 24: Focus on Protection: growth led by proprietary channels
1 Focus on Protection Protection growth led by proprietary channels Total Protection APE % Individual protection penetration within Channels Proprietary 12% 15% 11% 12% 9% 10% 5% 8% 7% FY 17 FY18 9M' FY 18 9M' FY 19 4% 4% 3% 2% Banca & others 1% 1% 1% 5% 3% 3% 3% 3% FY 17 FY18 9M' FY 18 9M' FY 19 2%
Slide 25: Balanced product mix with focus on long tenor life coverage
1 Balanced product mix with focus on long tenor life coverage Average Policyholder Average Policy Term Average PPT* Product Type Age (Years) (Years) (Years) Endowment 35 23 10 ULIP 37 14 10 Whole Life 36 64 51 Money back 28 17 16 Pure Term 35 34 33 GMIP/GIP 43 19 9 Health 39 17 17 Cancer Insurance 3
Slide 26: Superior customer outcomes and retention
Superior customer outcomes and retention with continuous 1 improvement across all quality parameters High quality business franchise Steady retention capabilities Conservation Ratio* Surrender to GWP 24% 90% 90% 89% 89% 21% 20% 20% FY17 FY18 9M' FY 18 9M' FY 19 FY17 FY18 9M' FY 18 9M' FY 19 Continuo
Slide 27: Comprehensive multi-channel distribution with consistent proprietary contribution
Comprehensive multi-channel distribution with consistent 2 contribution from proprietary channels , investment in proprietary aiding growth Proprietary Axis Bank Other Banks Others 1% 1% 1% 1% 12% 13% 13% 11% 26% 17% 58% 56% 55% 59% 30% 17% 29% 27% 31% 33% FY 17 FY18 9M' FY18 9M' FY19 Investment in
Slide 28: Channelize efforts and investments towards growth in Proprietary channel
Channelize efforts and investments towards growth in 2 Proprietary channel 1L 2L Agency office expansion Variable agency cost model ▪ Increase in offices by leveraging ▪ Significant expansion of IMF existing infrastructure channel ▪ Selectively expand in higher ▪ Drive recruitment and affluent geogr
Slide 29: Highly efficient agency channel and strong banca relationships
Highly efficient and productive agency channel and strong banca 2 relationships with consistent growth Highly efficient and productive agency channel with focus on quality of advice Active Agent productivity (Rs ‘000 pm) Branch productivity (Rs Lakhs pm) 92.4 26.9 27.9 83.9 79.5 24.4 23.2 69.3 FY17
Slide 30: Using digital technologies to harness data and analytics
Using digital technologies to harness data and analytics for more efficient sales 3 processes and better customer experience ▪ Transforming Digital 4 1 ▪ Digital Marketing & Interface ecommerce Higher customer Smarter lifetime value Acquisition Digital technologies to power 4 3 Value driver 2 Better
Slide 31: Digital Penetration Growing Rapidly Across All Customer touch points
Digital Penetration Growing Rapidly Across All Customer touch points 3 (YTD Dec’18) Key Business Lever Performance Update 1 Online Sales through Website 134% YoY Growth in New Business YoY growth in customer traffic 2 Digital Traffic on Website 15% 63% on company’s website 3 Online Customer Service
Slide 32: Life Insurance business management retooled across the enterprise
3 Life Insurance business management retooled across the enterprise Prospecting & Solution Fulfillment Servicing Generation 14K+ Sellers continue using the lead 95% 40% generation tool every month (11k of all policies applied through of all active user base are using last year) automated tool (vs. 8
Slide 33: Leveraging the latest technologies and integrations with ecosystem partners
Leveraging the latest technologies and integrations with ecosystem partners 3 to enable a seamless, best-in-class customer experience across the entire customer life cycle. Customer Claims and Seller On-boarding Underwriting Policy Fulfillment Servicing Renewal onboarding Maturity • Mobile based • M
Slide 34: Key Results – Embedded Value and VNB Disclosure for 9MFY19
Key Results – Embedded Value and VNB Disclosure for 9MFY19 The Embedded Value1 (EV) as at 31st Dec 2018 is Rs 8,2542 Cr. The annualized Operating Return on EV (RoEV) 3 over 9M FY19 is circa 18.8%. The New Business Margin (NBM) over 9M FY19 is 22.8% (before allowing for operating cost overrun) and 20
Slide 35: EV movement analysis: March 2018 to September 2018
EV movement analysis: March 2018 to September 2018 345 42 153 8,034 290 282 7,752 7,509 VIF VIF VIF 5,401 5,028 5,401 Operating RoEV: 18.5% NAV NAV NAV 2,482 2,633 2,351 Opening EV Value of Unwind Operating Non-Operating Closing EV Proposed Interim Closing EV New Business variance Variance (before i
Slide 36: Awards and recognitions for Max Life
Awards and recognitions for Max Life CELENT MODEL INSURER AWARD in the Asia Pacific Region Best Life Insurance Best business leader – Best use of six sigma in company Sumit Rai banking and financial sector - Insta claim (1 day approval) 36
Slide 37: Awards and Accolades
Awards and Accolades 1 Setting higher benchmark with every award ▪ Ranked 43rd amongst India’s top 50 best companies appeared in list of Great Place to Work for 2018 ▪ Recognized by Employee Engagement Leadership Award in the category of “Best use of the Employee Award”. And “Best Social Responsibil
Slide 38: Thank you
INSURANCE Thank you
Slide 39: Annexure
QMAXise8 MAX INSURANCE Annexure
Slide 40: Max Life maintains 4th rank among private players
Max Life maintains 4th rank among private players Individual new business premium (Rs Cr) Rank Company 9MFY19 9MFY18 Growth (%) Private Market Share (%) 1 SBI Life 6,106 5,349 14% 23.7% 2 ICICI Prudential Life 4,815 5,401 -11% 18.7% 3 HDFC Standard Life 3,251 2,982 9% 12.6% 4 Max Life 2,244 1,875 20
Slide 41: Performance update- Q3'FY19 and 9M'FY19
Performance update- Q3’FY19 and 9M’FY19 Quarter Ended Q-o-Q 9M Ended Y-o-Y Key Business Drivers Unit Dec'17 Dec'18 Growth Dec'17 Dec'18 Growth a) Individual adjusted premium Rs. Crore 764 866 13% 1,876 2,245 20% b) Gross written premium income Rs. Crore 3,044 3,435 13% 7,852 9,054 15% First year pre
Slide 42: Overview of the components of the EV as at 31st December 2018
Overview of the components of the EV as at 31st December 2018 VIF Net worth and EV Market value of Shareholders’ owned assets over liabilities Time value of financial options Cost of residual and guarantees non-hedgeable risks Frictional cost Net Worth Rs 2,456 Cr TVFOG Rs 36 Cr CRNHR Present Rs 750
Slide 43: Value of New Business and New Business Margins as at 31st December 2018
Value of New Business and New Business Margins as at 31st December 2018 Description 9M FY18 9M FY19 Y-o-Y growth APE 1 1,893 2,291 21% New Business Margin (NBM) 20.0% 22.8% +280 bps (before cost overrun) New Business Margin (NBM) 18.0% 20.4% +240 bps (post cost overrun) Value of New Business (VNB) 3
Slide 44: Sensitivity analysis as at 30th September 2018
Sensitivity analysis as at 30th September 2018 EV New business Sensitivity EV VNB Sensitivity Value (Rs Cr) % change VNB (Rs Cr) | NBM % change Value (Rs Cr) % change Value (Rs Cr) % change Base Case (before final SH dividends) 8,034 - 290 | 20.4% - Base Case 7,142 - 204 - Lapse/Surrender - 10% incr
Slide 45: 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 FBIL 1 as at 31st Dec 2018. The VNB is calculated using the beginning of respective quarter’s risk free yield curve (i.e. 31 st March 2018, 30th Jun
Slide 46: 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. The VIF is reduced for the value of any maintenance expense overrun in the future. The overrun represents the excess maintenance expenses
Slide 47: MAX
MAX FP nsurance
Max Financial Services — Investor Presentation (February 2019) on 6ix