Max Financial Services Limited · NSE:MFSL
Max Financial Services — H1 FY2025 Earnings Presentation
54 slides from Max Financial Services's earnings presentation, Oct 22, 2024
Slide 1: Exchange filing cover letter: Investor Release Q2 FY25
October 22, 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– Q2 FY 25 Pursuant to Regulatio
Slide 2: Max Financial Performance Update, Investor Release H1 FY'25
Max Financial Performance Update Investor Release H1 FY’25 October 22, 2024 ^Individual Death Claims Paid Ratio as per Audited Financials for FY 2023-24
Slide 3: Section I: H1 FY'25 Key Highlights
SECTION I Max Financial Services and Max Life Insurance : H1 FY’25 Key Highlights
Slide 4: H1 FY'25 Key highlights
H1 FY’25 Key highlights ▪ MFSL revenue* excluding investment income at Rs 12,820 Cr, grows 14% in H1 FY’25. Consolidated Profit After Tax at Rs 295 Cr ▪ Individual Adjusted first year Premium at Rs 3,309 cr grew by 31% vs Private industry growth of 24%. Revenue ▪ Private Market share at 9.3% during
Slide 5: Max Life Financial Performance Summary H1 FY'25
Max Life Financial Performance Summary H1 FY’25 Total APE1 Gross Written Premium Renewal Premium AUM Rs 3,623 Cr 31% Rs 13,137 Cr 14% Rs 8,046 Cr 12% Rs 1,70,144 Cr 27% [Rs 2,766 Cr] [Rs 11,496 Cr] [Rs 7,215 Cr] [Rs 1,34,161 Cr] Profit Before tax Net Worth2 Policyholder Cost to Policyholder Expense
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 3.3% 21.9% 74.8% 3.3% 21.9% 74.8% 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 Q2 FY'25 in proprietary channels and segments of choice
Continue to post industry leading growth in Q2 FY’25 fueled by disproportionate growth in proprietary channels & segments of choice Industry leading outcomes Growth in proprietary channels Growth in Segments of choice Q2 Individual Adjusted FYP Proprietary growth (APE) Retail Protection3 & Health2 A
Slide 11: Max Life has delivered 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 3,623 7,433 18,506 8,046 2,766 16,382 7,215 6,248 FY'23 FY'24 H1 FY'24 H1 FY'25 FY'23 FY'24 H1 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: Line of Business# H1 FY’24 H1 FY’25 Growth PAR Annuity NPAR Savings Protection & Health GROUP ULIP Par 618 435 -30% Annuity 179 185 3% NPAR Savings 784 921 18% 27% 30% Protection & Health2 262 396 51% 35% 42% Group Credit L
Slide 13: Value of New Business (VNB) and New Business Margin (NBM)
Value of New Business (VNB) and New Business Margin (NBM) Amount in INR Cr 206 66 -103 663 H1 FY’24 Impact of higher Change in business H1 FY’25 APE mix and margins NBM 24.0% - -2.8% 21.2% Note: Figures in Rs Cr. and may not add up due to rounding *Impact of change of RFR and assumptions is negligib
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) 16.5% 198% 15.4% 190% 184% 14.2% 13.8% 172% 150% Solvency Limit FY'23 FY'24 H1 FY'24 H1 FY'25 FY'23 FY'24 H1 FY'24 H1 FY'25 Operating RoEV Underwriting Profits Amoun
Slide 15: EV movement analysis: March 2024 to September 2024
EV movement analysis: March 2024 to September 2024 23,338 1,612 797 660 21,726 766 9 19,494 VIF 17,357 Operating RoEV: 16.8% VIF VIF 17,357 15,568 NAV NAV NAV 5,981 3,926 4,369 Opening EV Value of Unwind Operating variance Non-Operating Closing EV Capital Closing EV New Business Variance (excl Capit
Slide 16: Max Life Asset Under Management reached INR 1.7 lakh crore
Max Life has consistently grown its Asset Under Management1, reached INR 1.7 lakh crore Assets Under Management - MLI is the 4th largest2 manager of private LI AUMs and Largest Par fund2 AUM of ~74K Cr Linked: Healthy mix of Debt and Equity Amount in INR ‘000 Cr Debt Equity Linked Traditional 170 15
Slide 17: 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 ▪ Accorded Silver - Digital Branding ▪ Awarded the Digital Transformation Award ▪ Amongst ‘Top 50
Slide 18: Section III: Max Life Insurance Strategy
SECTION III Max Life Insurance – Strategy
Slide 19: 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 20: Growth in both 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% 2,957 1,657 2,307 1,096 52% 62
Slide 21: 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 H1 FY'24 H1 FY'25 H1 FY'24 H1 FY'25 ▪ New models within agency scaling up rapidly and contributing >5% of ▪ 29% YoY growth in H
Slide 22: Expanding distribution with 26 new partnerships in 6M FY'25
A Max Life has been augmenting its distribution capability by expanding both traditional and emerging ecosystems with 26 new partnerships in 6M of FY’25 Ecosystems Key partners signed by Max Life Q1 FY’25 Q2 FY’25 Bancassurance Corporate Agents Retail SL Group Credit Life* Online/Offline Brokers & o
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- Higher ULIP in Ecommerce owing to Bancassurance Product Mix success of new fund offers PAR Annuity NPAR Savings Protection & Health ULIP PAR Annuity NPAR Savings Protection & Health UL
Slide 24: Driving 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 and new customer segments
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, focus on longer term 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: IRIS retirement survey, now in its 4th edition
B IRIS, one of India’s leading retirement-focused surveys, now in its 4th edition India Retirement Index indicating the degree to which Indians feel prepared for tomorrow’s retired life on a scale of 0 to 100. IRIS: Consistent upward movement seen in IRIS index and sub indices Awareness: On an avera
Slide 28: Focus on development and growth of 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 29: Understanding the 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 Products1 Total Protection2 and Health APE Retail Protection2 and Health APE Amount in INR Cr Amount in INR Cr 1.9x 2.4x 32% 51% 70 64 669 396 47 505 262 30 31 352
Slide 30: 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 31: 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 32: 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) NPAR Customers opting for continuation of their policy1 84% 87% 5M FY24 5M FY25 70% 71% Policies continuing to pay premiu
Slide 33: Next generation claims system TEJAS and claims paid ratio
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 34: 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 35: 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 Journey designed for NRI customers Automated 100% call quality audits for agent effectiveness Near real time customer call insights to drive conversion rates of 7-8% Mar
Slide 36: 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 Best-in-class journey with smarts for better seller and customer experience WhatsApp for Business to chase in- State of the art Integration
Slide 37: Building a 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) MANAGEMENT PROSPECT
Slide 38: Delivering Superior Customer Service Experiences
4 Delivering Superior Customer Service Experiences Business Login Enablement Saral – Application Tracking EMBEDDED INTELLIGENCE Reduction of annual renewal call center costs Proactive Surrender retention & customer engagement models 1.5L+ Cross-Sell leads generated through digital channels annually
Slide 39: Leveraging Generative AI for competitive advantage
5 Leveraging Generative AI for competitive advantage 1. Sales Enablement 2. Customer Service 3. Employee Experience Enterprise Grade use case development Enterprise Grade use AI Driven RolePlay case development Generative AI Sales AI-Driven roleplay- Conversational intelligence Assistant to enhance
Slide 40: Agile, Scalable & Resilient Technology Platform
6 Agile, Scalable & Resilient Technology Platform to Digitally power MLI Data & Analytics Platform Compliance & Security Cloud Foundation Legacy Modernization 76% on hybrid, multicloud architecture 1st organization in India & Lakehouse architecture providing ~100% Resiliency 2nd in world to have Sin
Slide 41: Section IV: Max Life Insurance ESG
SECTION IV Max Life Insurance – ESG
Slide 42: 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 41
Slide 43: 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 44: Four pillars of our sustainability framework (3/3)
Four pillars of our sustainability framework (3/3) Work Ethically & Sustainably Care for People Financial Responsibility Green Operations Governance Diversity & Inclusion Committed to responsible Energy Management Diverse Board composition with Gender diversity ratio at 27.8% at investments Home Off
Slide 45: Progress made in our key strategic shifts in ESG journey
Progress made in our key strategic shifts identified in our ESG journey- as on 30th September 2024 Indicators Key Metric for ESG Indicators Key Targets Current Status Digital Digital penetration 95% of digital penetration by FY 2026 91.14% as of 30th Sept’24 Operations Diversity & Achieve 28% gender
Slide 46: Annexures
> _o ANNEXURES a
Slide 47: Expansion in case size and number of policies sold in 6M FY'25
Expansion in both case size and number of policies sold in 6M FY’25 Case Size (INR’000) NoP’s (000’s) Par Annuity NPAR Savings Protection & Health ULIP Par Annuity NPAR Savings Protection & Health ULIP 102 100 715 103 356 93 153 163 140 165 597 150 290 116 116 27 34 40 59 32 189 134 110 110 147 107
Slide 48: 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 49: Sensitivity analysis as at 30th September 2024
Sensitivity analysis as at 30th September 2024 EV Value of new business New Business Margin Sensitivity Value (Rs Cr) % change VNB (Rs Cr) | NBM % change VNB (Rs Cr) | NBM % change Base Case 23,338 - 766 - 21.2% - Lapse/Surrender - 10% increase 23,512 0.7% 748 (2.4%) 20.6% (0.6%) Lapse/Surrender - 1
Slide 50: 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 51: 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 52: 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 53: 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 September 2024. The VNB is calculated using the beginning of respective quarter’s risk free yield curve (i.e. 31st March 2024, 30th June
Slide 54: 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
Max Financial Services — H1 FY2025 Earnings Presentation on 6ix