Slide 1: Max Financial Performance Update – Investor Release Q1 FY20
Max Financial Performance Update Investor Release Q1 FY20 6th August, 2019
Slide 2: Section I: Max Financial Services Q1FY20 Key Highlights
SECTION I Max Financial Services : Q1FY20 Key Highlights
Slide 3: Max Financial Services: Q1FY20 Key Highlights
Max Financial Services : Q1FY20 Key Highlights MSI to be issued 21.45% stake in MFS at Rs 421.67 per share through a preferential allotment. In exchange, MFS to acquire 19.98% stake in Max Life from MSI, at Rs 80.89 per share. MFS also has a call option, and MSI the corresponding Put, to acquire res
Slide 4: Section II: Max Life Insurance – Business Overview
SECTION II Max Life Insurance – Business Overview
Slide 5: Industry Landscape (Q1 FY'20): Total Industry grew by 14%
Industry Landscape (Q1 FY’20): Total Industry grew by 14%, while Pvt. players grew by 24% and LIC by 3%) YoY Growth basis Individual Adjusted FYP FY’18 FY’19 Q1 FY’19 Q1 FY’20 Private Industry YoY growth 24% 12% 5% 24% Industry 22.0% 23% 21.0% Max Life 19.0% 15% 14% 9.0% 6% Max Life’s private 9% 9%
Slide 6: Max Life has delivered strong performance on new and renewal business
Max Life has delivered strong performance on both new business and renewal business; Maintained 4th rank in the private industry New Business Premiums (on APE basis) Renewal Income Amount in INR Cr Amount in INR Cr 16% 22% 9,415 3,950 8,108 3,248 23% 12% 558 685 1,554 1,740 FY18 FY19 Q1 FY19 Q1 FY20
Slide 7: 33% growth in VNB with Q1 margins at ~19.6%
33% growth in VNB with Q1 margins at ~19.6% driven by increased focus on Non Par Savings Margins (post-overrun)* # Product Mix – Shifting towards a balanced product mix, NPAR savings mix 150 bps increased by 1000 bps. Individual Protection mix grew by 10 bps, while the Group Protection mix shrunk by
Slide 8: Embedded value grew at 22%, operating RoEV at 14.8%
Embedded value grew at 22%, while operating RoEV for Q1FY20 at 14.8% Embedded Value (EV) - EV has grown at 22% driven by growth in value of Operating Return on Embedded Value - RoEV has been consistent at ~15% in new business and quality of inforce business Q1FY20 Amount in INR Cr 20% 22% 9257 9314
Slide 9: Max Life has consistently grown its Asset Under Management
Max Life has consistently grown its Asset Under Management Debt-Equity Mix - Healthy mix of Debt and Equity on an overall level 22% 22% 22% 21% Assets Under Management - MLI is now the 4th largest manager LI AUMs, including retail AUM of MFs. Amount in INR ‘000 Cr 78% 78% 78% 79% 20% 18% 63 64 FY18
Slide 10: Business Excellence, Leaders in Quality, Focus on People
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 ▪ Winner of CII Industry ▪ No. 1 in Customer Loyalty ▪ Ranked 46th - India’s Best Innovation Awar
Slide 11: Section III: Max Life Insurance – Strategy FY19-22
SECTION III Max Life Insurance – Strategy FY19-22
Slide 12: Aspirations FY22
Max Life embarked on its journey of 25%+ VNB growth, 25% NBM and 25% ROEV aspirations by FY22. Key strategic elements to achieve the vision A B C D Predictable & Sustainable Digitalto Product innovation Customer centricity across the value Digitization for efficiency and growth drive margins chain i
Slide 13: Growth in both Proprietary and Bancassurance channels
A Max Life has focused on ensuring growth in both its Proprietary and Bancassurance channels Proprietary Channels New Business (APE) – Lower sales growth in proprietary, due to a transient impact caused by agency restructuring. Amount in INR Cr Channel Mix - Max Life has focused on maintaining a bal
Slide 14: Product mix across proprietary and Bancassurance channels
Product mix proprietary and Bancassurance channels aligned to customer needs; future focus A to be on driving balanced product mix Proprietary Channels Product mix - biased towards traditional products and Bancassurance Product Mix – focused on increasing NPAR Savings to drive protection for driving
Slide 15: Complete suite of products, focus on longer term products
Max Life has a complete suite of products and focus is on selling longer term products along B with improving penetration of pure protection offerings Average Policyholder Age Average Policy Term Average PPT Max Life has products across all categories Product Type (Years) (Years) (Years) Endowment 3
Slide 16: Focus on Protection: increase in individual protection APE
Focus on Protection: 23% increase in individual protection APE and 18% increase in B individual protection policies, 34% of total individual policies are pure protection Total APE (Individual + Group) No of Protection Policies (Individual) Figures in Rs. Cr. Figures in ‘000. 403 176 256 175 120 114
Slide 17: Customer measures: conservation, persistency, claims paid
Strong focus towards customer measures has helped deliver superior performance across C health parameters and will continue to remain an important priority Conservation Ratio Persistency 91% 91% 85% 80% 83%82% 90% 72%71%72%72% 62%64%64%64% 57% 58% 57%60% 53%53%54%53% 89% FY18 FY19 Q1 FY'19 Q1 FY'20
Slide 18: Value chain digitized, leveraging digitization and AI
Significant elements of the value chain digitized, focus remains to leverage digitization & AI for D augmenting efficiencies Digital building blocks in end-to-end customer journey deployed at Max Life Agent Application Sourcing Underwriting Verification Issuance Account service Collection Onboarding
Slide 19: Section IV: Max Life Insurance – MCEV Disclosures Q1 FY'20
SECTION IV Max Life Insurance – MCEV Disclosures: Q1 FY’20
Slide 20: Key Results
Key Results The Embedded Value1 (EV) as at 30th June 2019 is Rs 9,314 Cr. The annualized Operating Return on EV (RoEV) over Q1 FY20 is 14.8%. Due to the sales being skewed towards later part of the year and investments being made by the Company in expansion of proprietary channels, the impact of cos
Slide 21: Overview of the components of the EV as at 30th June 2019
Overview of the components of the EV as at 30th June 2019 VIF Net worth and EV Market value of Shareholders’ owned assets over liabilities Time value of financial options and guarantees Cost of residual non- hedgeable risks Frictional cost Net Worth Rs 2,477 Cr TVFOG Rs 43 Cr CRNHR EV Rs 668 Cr FC P
Slide 22: Value of New Business and New Business Margins
Value of New Business and New Business Margins as at 30th June 2019 Description Q1 FY’19 Q1 FY’20 Y-o-Y growth APE 1 558 685 23% New Business Margin (NBM) 23.5% 24.9% +150 bps (before cost overrun) New Business Margin (NBM) 18.1% 19.6% +150 bps (post cost overrun) Value of New Business2 (VNB) 101 13
Slide 23: Sensitivity analysis as at 31st March 2019
Sensitivity analysis as at 31st March 2019 Figures in Rs Cr. EV New business Sensitivity Value (Rs Cr) % change VNB (Rs Cr) | NBM % change Base Case (before final SH dividends) 9,257 - 856 | 21.7% - Lapse/Surrender - 10% increase 9,103 (2%) 821 | 20.8% (4%) Lapse/Surrender - 10% decrease 9,420 2% 89
Slide 24: 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 methodol
Slide 25: 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 26: 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 27: 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 Jun2019. The VNB is calculated using the beginning of respective quarter’s risk free yield curve (i.e. 31st March 2019). ▪ No allo
Slide 28: 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 29: Section V: Max Life Insurance – Financial Performance
SECTION V Max Life Insurance – Financial Performance
Slide 30: Financial Performance Summary Q1 FY'20
Financial Performance Summary Q1 FY’20 Pvt Market Share Individual APE Gross Written Premium AUM 23% 9% 7 bps Rs 679 Cr Rs 2,651 Cr 14% Rs 63,877 Cr 18% [9%] [Rs 552 Cr] [Rs 2,320 Cr] [Rs 53,940 Cr] Profit Before tax Net Worth Policyholder Expense to Policyholder Cost to GWP Ratio GWP Ratio Rs 77 Cr
Slide 31: Consistent growth in top line and renewals, driving cost efficiencies
Delivering consistent growth in top line and renewals coupled with driving cost efficiencies Financial Performance FY18 FY19 Q1 FY’19 Q1 FY’20 22% 23% Individual APE 3,217 3,917 679 552 15% 12% Renewal Premium 8,152 9,415 1,554 1,740 17% 14% Gross Premium 12,501 14,575 2,320 2,651 Policyholder expen
Slide 32: Healthy and consistent profitability while maintaining solvency
Healthy and consistent profitability creating value to all the stakeholders while maintaining solvency above required levels Financial Performance FY18 FY19 Q1 FY’19 Q1 FY’20 1% -16% Profit(before Tax) 615 623 91 77 20% 18% 52,237 62,798 53,940 63,877 AUM 150 bps 150 bps 20.2% 21.7% 18.1% 19.6% New
Slide 33: Performance update - Q1'FY20
Performance update- Q1’FY20 Quarter Ended Key Business Drivers Unit Q-o-Q Growth Jun’18 Jun’19 a) Individual APE Rs. Crore 552 679 23% b) Gross written premium income Rs. Crore 2,320 2,651 14% First year premium 536 646 21% Renewal premium 1,554 1,740 12% Single premium 230 265 15% c) Shareholder Pr
Slide 34: MAX
MAX FP surance