Max Financial Services Limited · NSE:MFSL
Max Financial Services — H1 FY2019 Earnings Presentation
40 slides from Max Financial Services's earnings presentation, Nov 14, 2018
Slide 1: Cover letter to stock exchange: Investor Release H1 FY2019
J Q MAX1SERVICES FINANCIAL ~ November 14, 2018 The Manager The Secretary Department of Corporate Services National Stock Exchange of India Ltd. SSE Limited Exchange Plaza Phiroze Jeejeebhoy Towers Sandra -Kurla Complex Dalal Street Sandra (E), Mumbai - 400 021. Mumbai 400 051 Scrip Code : 500271 Nam
Slide 2: Investor Release H1 FY19 and Disclaimer
Max Financial Services Investor Release- H1’FY 19 November 2018 Disclaimer This release is a compilation of financial and other information all of which has not been subjected to audit and is not a statutory release. This may also contain statements that are forward looking. These statements are bas
Slide 3: Max Financial Services: H1FY19 Key Highlights
Max Financial Services : H1FY19 Key Highlights Group Revenue* at Rs 7,168 Cr, grows 19% y-o-y. Group PBT at Rs 180 Cr, down 12% y-o- 1 y, due to one-off expenses relating to acquisition and shift in product mix 2 MCEV as at 30th Sep 2018 at Rs. 7,752 Cr; Operating RoEV 18.5%, improves 170 bps y-o-y
Slide 4: Agenda
Agenda 1 Industry Overview 2 Max Life Overview 3 EV Disclosures 4 Financial Performance 5 Awards and Accolades Investor Release 3
Slide 5: Significant potential to expand both 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 6: Industry Landscape (H1 FY'19): Max Life recorded strong growth
Industry Landscape (H1 FY’19): Max Life recorded strong growth (+24%) as compared to Industry growth (+10%) and Private growth (11%) YoY Growth basis Individual Adjusted FYP FY’17 FY’18 H1’ FY18 H1’ FY19 Private Industry YoY growth 26% 24% 37% 11% Industry Max Life 25% 25% 25% 24% 21% 19% 19% 10% Ma
Slide 7: Agenda
Agenda 1 Industry and Economic Overview 2 Max Life Overview 3 EV Disclosures 4 Financial Performance 5 Awards and Accolades Investor Release 6
Slide 8: 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 9: Financial Performance Summary H1' FY19
1 Financial Performance Summary H1’ FY19 Pvt Market Share Individual APE Gross Written Premium AUM 26% 9% 90 bps Rs 1405 Cr Rs 5,619 Cr 17% Rs 56,070 Cr 17% [8%] [Rs 1,118 Cr] [Rs 4,808 Cr] [Rs 47,756 Cr] Profit Before tax Net Worth Policyholder Cost to Policyholder Expense GWP Ratio to GWP Ratio Rs
Slide 10: 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% 34% 41% 41% 9% 3% 8% 4% 7% 8% 6% 5% 5% 10% 7% 4% 4% 8% 7% 13% 54% 43% 48% 41% FY 17 FY 18 H1' FY 18 H1' FY 19 Product mix basis total APE (i
Slide 11: Focus on Protection
Focus on Protection 1 78% increase in individual protection APE and 56% increase in individual protection policies, 30% of total individual policies are protection Figures in Rs. Cr. Figures in ‘000. Total APE (Individual + Group) No of Protection Policies (Individual) 256 200 189 120 93 101 123 114
Slide 12: 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 24 11 ULIP 37 14 10 Whole Life 36 64 51 Money back 28 17 16 Pure Term 35 33 32 GMIP/GIP 43 19 9 Health 39 16 16 Cancer Insurance 3
Slide 13: Superior customer outcomes and retention with continuous improvement
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 91% 91% 89% 90% 26% 21% 21% 20% FY17 FY18 H1' FY 18 H1' FY 19 FY17 FY18 H1' FY 18 H1' FY 19 Continuo
Slide 14: Comprehensive multi-channel distribution with consistent contribution from proprietary channels
Comprehensive multi-channel distribution with consistent 2 contribution from proprietary channels Proprietary Axis Bank Other Banks Others 1% 1% 1% 1% 12% 13% 14% 11% 26% 22% 53% 54% 58% 59% 33% 17% 33% 35% 29% 27% FY 17 FY18 H1' FY18 H1' FY19 Investment in proprietary channels and growth in agency
Slide 15: 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 16: 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) 94.9 26.9 27.7 83.9 79.4 24.4 69.3 22.0 FY17
Slide 17: Using digital technologies to harness data and analytics
Using digital technologies to harness data and analytics for more 3 efficient sales 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 18: Digital Penetration Growing Rapidly Across All Customer touchpoints
Digital Penetration Growing Rapidly Across All Customer 3 touchpoints Key Business Lever Performance Update Online Sales through Website YoY Growth in New Business 1 (including nudge model) 158% 2 15% YoY growth in customer traffic Digital Traffic on Website 34% on www.maxlifeinsurance.com 3 Online
Slide 19: 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 20: Agenda
Agenda 1 Industry and Economic Overview 2 Max Life Overview 3 EV Disclosures 4 Financial Performance 5 Awards and Accolades Investor Release 19
Slide 21: Key Results
Key Results The Embedded Value1 (EV) as at 30th September 2018 (post allowing for proposed interim shareholder dividend) is Rs 7,752 Cr. Before allowing for proposed interim shareholder dividend, the EV is Rs 8,034 Cr. The Operating Return on EV2 (RoEV) over H1 FY19 is 18.5%. Including non-operating
Slide 22: Overview of the components of the EV as at 30th September 18
Overview of the components of the EV as at 30th September 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 2,633 Cr TVFOG Rs 36 Cr CRNHR Present Rs 74
Slide 23: Value of New Business and New Business Margins as at 30th September 2018
Value of New Business and New Business Margins as at 30th September 2018 Description H1 FY18 H1 FY19 Y-o-Y growth APE 1 1,131 1,420 26% New Business Margin (NBM) 20.3% 22.9% +260 bps (before cost overrun) New Business Margin (NBM) 18.1% 20.4% +230 bps (post cost overrun) Value of New Business2 (VNB)
Slide 24: 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 25: 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 26: Agenda
Agenda 1 Industry and Economic Overview 2 Max Life Overview 3 EV Disclosures 4 Financial Performance 5 Awards and Accolades Investor Release 25
Slide 27: Delivering consistent growth in top line and renewals coupled with cost efficiencies
Delivering consistent growth in top line and renewals coupled with driving cost efficiencies Financial Performance FY 17 FY18 H1 FY18 H1 FY19 22% 3,248 26% 2,657 1,405 Individual APE 1,118 15% 15% 7,114 8,152 3,236 3,711 Renewal Premium 16% 12,501 17% 5,619 10,780 4,808 Gross Premium Policyholder ex
Slide 28: Healthy and consistent profitability while maintaining solvency above required levels
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 H1 FY18 H1 FY19 20% 17% 768 276 Profit(before Tax) 615 236 18% 17% AUM 44,370 52,237 47,756 56,070 140 bps 230 bps New Busi
Slide 29: Assets under management- Y-o-Y growth at 17%
Assets under management- Y-o-Y growth at 17% 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 28
Slide 30: Performance update- Q2'FY19 and H1'FY19
Performance update- Q2’FY19 and H1’FY19 Quarter Ended Q-o-Q Half year Ended Y-o-Y Key Business Drivers Unit Sep'17 Sep'18 Growth Sepr'17 Sep'18 Growth a) Individual APE Rs. Crore 647 853 32% 1,118 1,405 26% b) Gross written premium income Rs. Crore 2,801 3,299 18% 4,808 5,619 17% First year premium
Slide 31: Agenda
Agenda 1 Industry and Economic Overview 2 Max Life Overview 3 EV Disclosures 4 Financial Performance 5 Awards and Accolades Investor Release 30
Slide 32: 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 33: Disclaimer
Disclaimer ▪ This presentation has been prepared by Max Financial Services Ltd. (the “Company”). No representation or warranty, express or implied, is made and no reliance should be placed on the accuracy, fairness or completeness of the information presented or contained in the presentation. The pa
Slide 34: Annexure
Annexure Investor Release 33
Slide 35: 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. 1 ▪ For the market consistent methodo
Slide 36: 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 37: 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 1,000 stochastic scenarios provided by Moody's Analytics. ▪ Given that the shareholder payout is likely to be symmetrical for guar
Slide 38: 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 30th September 2018. The VNB is calculated using the beginning of respective quarter’s risk free yield curve (i.e. 31 st March 2018 and
Slide 39: 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 40: Thank you
INSURANCE Thank you
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