Max Financial Services Limited · NSE:MFSL
Max Financial Services — Q1 FY23 Earnings Presentation
53 slides from Max Financial Services's earnings presentation, Aug 1, 2022
Slide 1: Max Financial Performance Update
Max Financial Performance Update Investor Release Q1 FY23 August 1, 2022
Slide 2: Section I: Q1 FY23 Key Highlights
SECTION I Max Financial Services : Q1FY23 Key Highlights
Slide 3: Max Financial Services: Q1 FY23 Key Highlights
Max Financial Services: Q1 FY23 Key Highlights Consolidated Revenue excluding investment income at Rs 4,003 Cr, grows 17% in Q1FY23. Consolidated PAT at Rs 68 Cr, Up 1 91%, due to lower tax expenses than corresponding previous quarter New Business Premium at 1,484Cr, YoY growth of 20%, APE at 1,009C
Slide 4: Section II: Max Life Insurance – Business Overview
SECTION II Max Life Insurance – Business Overview
Slide 5: Key Highlights for Max Life (1/2)
Key Highlights for Max Life (1/2) 4 Improved 5-Yr CAGR of 16% on Consistently maintained Individual new business market share rank#4 from Consistent growth vs since last 5 years 10% for life insurance industry 9.2% to 9.9% in 5 years 5-Yr CAGR of 5-Yr CAGR of Retail protection 16% in Prop channels 1
Slide 6: Key Highlights for Max Life (2/2)
Key Highlights for Max Life (2/2) Employee metrics Great Places to Experienced leadership Employee engagement1 Work rank #18 in FY21 with almost half score of >95% the leadership’s for last 3 years Rank #55 among Great Places tenure with Max Life to Work in Asia in FY21 more than a decade Customer m
Slide 7: Industry Landscape (Q1 FY23): Max Life outpacing private and total industry
Industry Landscape (Q1 FY23): Max Life grew at 3 year CAGR of 14% outpacing both private and total industry which grew by 13% and 11% respectively Q1 FY’23 FY’21 FY’22 Q1 FY’22 Q1 FY’23 3 Year CAGR Private Industry YoY growth 8% 22% 26% 47% 13% 42% 34% 19% 16% 16% 14% 14% 12% 11% Industry Max Life 3
Slide 8: Financial Performance Summary Q1 FY23
Financial Performance Summary Q1 FY23 Individual APE Gross Written Premium Renewal Premium AUM Rs 995 Cr 15% Rs 4,103 Cr 18% Rs 2,619 Cr 17% Rs 1,07,140 Cr 14% [Rs 864 Cr] [Rs 3,484 Cr] [Rs 2,284 Cr] [Rs 93,697 Cr] Profit Before tax Net Worth Policyholder Cost to Policyholder Expense to GWP Ratio GW
Slide 9: Max Life has delivered strong performance on new business
Max Life has delivered strong performance on new business New Business Premiums (on APE basis) –Driven by strong growth in Renewal Income – Delivering consistent growth proprietary channels in Q1 Amount in INR Cr Amount in INR Cr 5,588 14,509 2,619 4,957 1,009 875 12,192 2,244 FY21 FY22 3M FY22 3M F
Slide 10: VNB increased by 23% over last year
VNB increased by 23% over last year aided by APE growth of 15% and expansion in product NBMs Value of New Business- Consistently growing VNB through balanced product Product Mix – Balanced product mix mix, Q1 3 year CAGR 17% Amount in INR Cr 37% 37% 37% 38% 213 1,528 1,249 172 30% 29% 27% 27% 5% 6%
Slide 11: Efficient capital management with profitable growth
Efficient capital management with profitable growth Opex to GWP Solvency Ratio (pre dividend) 201% 197% 196% 196% 17.4% 16.9% 150% 14.2% Solvency 13.5% Limit FY21 FY22 3M FY22 3M FY23 FY21 FY22 3M FY22 3M FY23 Operating Return on EV (RoEV) Underwriting Profits Amount in INR Cr Backbook Surplus NB St
Slide 12: Max Life has consistently grown its Asset Under Management
Max Life has consistently grown its Asset Under Management Assets Under Management - MLI is the 4th largest manager of private LI AUMs, Par fund size ~54K ULIP: Healthy mix of Debt and Equity Amount in INR ‘000 Cr Debt Equity 108 107 52% 54% 57% 54% 94 90 48% 46% 43% 46% 74 75 FY 21 FY 22 3M FY22 3M
Slide 13: 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 ▪ No. 1 in Customer Loyalty ▪ Ranked 55th amongst ‘2021 survey by IMRB Best Workplaces in Asia’ b
Slide 14: Section III: Max Life Insurance – Strategy
SECTION III Max Life Insurance – Strategy
Slide 15: 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 16: 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) Amount in INR Cr Channel Mix - Max Life has focused on maintaining a balanced distribution mix 15% 1,611 342 1,403 260 0% 0% 0% 1% 71% 70% 65% 71% 3M FY'22 3M FY23 FY2
Slide 17: Product mix in proprietary and Bancassurance channels
A Product mix in proprietary and Bancassurance channels aligned to customer needs; Proprietary Channels Product mix - biased towards traditional products and Bancassurance Product Mix - has been biased towards ULIPs to cater to protection for driving margins target customer segments 15% 22% 20% 26%
Slide 18: Products Innovation: 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 19: Products launched in Q1 FY23
B Products launched in Q1- FY23 Flexi Wealth Advantage Plan Smart Fixed-return Digital Plan Key Features Key Features Simplified on-boarding process along with instant confirmation of Return of All Charges on Maturity issuance after journey completion Guaranteed Loyalty Additions and Auto Debit Boos
Slide 20: 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 21: Focus on retirement
B Focus on retirement ▪ Extended insights to IRIS launch with V2.0 in TM Q2’22 ▪ 5000+ respondents with insights on health, emotional, financial preparedness for 2.0 tomorrow ▪ Enhanced media presence with Television presence & influencer backed campaign ▪ India’s retirement index stands at 44, heal
Slide 22: Focus on protection and its risk management
B Focus on protection and its risk management Customer Profiling and Selection Experience monitoring Profitability & Risk Management ▪ AI based risk models, Credit Bureaus, IIB ▪ Regular portfolio review/ Post issuance ▪ Regular repricing of products Database deployed in underwriting risk verificati
Slide 23: 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 24: Customer measures: persistency and claims paid ratio
Strong focus towards customer measures has helped deliver superior performance across C health parameters and will continue to remain an important priority Persistency# - Individual policies excluding single pay/fully paid up policies 84% 84% 67% 68% 59% 61% 55% 56% 50% 50% 13th Month 25th Month 37t
Slide 25: Significant progress on our Digital Journey
D We had made significant progress on our Digital Journey 50+ 72% Partners Automated Underwriting (Retail) Text 46% ~58 DIGITAL NATIVE FRICTIONLESS Infra on Cloud Claims paid everyday TALENT CUSTOMER ONBOARDING 48% <3 seconds >6L^ Insta COI (Axis) Page load time DIGITAL Text DIGITAL SALES Policies S
Slide 26: Max Life's Digital Strategy is based on 9 Key Pillars
D Max Life’s Digital Strategy is based on 9 Key Pillars Scale eCommerce Onboarding / Business 1 Digital Sales 2 Issuance 3 Customer Service 4 Enterprise 5 ▪ Digital Marketing Muscle ▪ Intelligent & Integrated ▪ Digital Native ▪ Omni Channel customer ▪ Mobile First Employee (Sharper prospecting) LEAD
Slide 27: Leveraging Digital Tech & Leader in E-Commerce Protection
D Max Life is Leveraging Digital Tech & is a Leader in E-Commerce Protection Sales… 1 New Unified Platform Progressive Web App (PWA) (Transformed to newer experience) ▪ PWA Launched with Push Notifications for user engagement and wider reach. ▪ Early Adoption in Ecom journey and Roadmap for extensio
Slide 28: Digitizing the sales force
D We are digitizing the sales Force by driving capability and Productivity 2 mSMART Smart Class AWE & Y.E.S Intelligent nudges on next best action Enables ADM to track and create monthly plan, activities, goals and PRP Virtual Training for Agents Sales management system for partnership Channels Did
Slide 29: Cloud native issuance and underwriting system
…Enabled by a state-of-the-art cloud Native issuance and underwriting system, D 3 Integration with Bank marketplaces, Partner Integration marketplace & eco-system integration Dolphin Scale-Up Integration with Market Places & creating Max Life Partner Integration Eco-system Integration For KYC detail
Slide 30: Building a New Age Omni Channel customer service platform
D We are Building a New Age Omni Channel customer service platform… 4 Revamped Website Revamped Customer Communications Omni Channel Customer Service Customer Portal Centralized communication Management One view for all servicing touch points System Did You Know 40 % + efficiency increased in agent
Slide 31: Frictionless customer experience and superior underwriting
D Frictionless customer experience and superior underwriting 3 4 Industry First Underwriting In House Dialer AI Model Input Mirror Relative DC Grading Report Health Score ➢ Simplified journey for an agent to start his work. ➢ Fake reports to be identified on the fly and actionable to be taken ➢ Sing
Slide 32: Cutting edge AI application at scale
Max Life has implemented cutting edge AI application at scale enabling superior business D 6 outcomes across the customer touchpoints New Business Purchase & Issuance Servicing & Retention Speech Analytics Conversational AI engine for Customer Deep Learning Customer Engagement, Retention Vision AI N
Slide 33: Investments in cloud and system modernization
D Our investments in cloud and system modernization is helping us scale business in an agile way… 7 Cloud Data & Analytics Platform Cloud Foundation Legacy Modernization ▪ Data Lake Foundation & Customer 360 ▪ Agility in operations support ▪ Modernized Treasury, HR, ▪ Data stores consolidation and r
Slide 34: Section IV: Max Life Insurance – ESG
SECTION IV Max Life Insurance – ESG
Slide 35: Sustainability Framework built around four pillars
The Sustainability Framework at Max Life is built around four pillars with key focus areas Four Pillars of Approach to Sustainability Work Ethically & Sustainably Care for People ▪ Corporate Governance ▪ Diversity & Inclusion ▪ Ethics & Compliance ▪ Employee Development ▪ Digital Initiatives ▪ Healt
Slide 36: Work Sustainably and Ethically
Work Sustainably and Ethically Work Sustainably & Ethically Governance Data Privacy & Security ▪ Dedicated ESG Management Committee in place from 2021 ▪ MLI received the DSCI Excellence Award for Best Security Practices in ▪ Appointed ESG Head to oversee ESG initiatives and actions in the India in 2
Slide 37: Care for People and Community
Care for People and Community Care for People & Community Diversity & Inclusion Health & Wellness ▪ Current gender diversity ratio at 25% at Max Life ▪ Counselling & Mental Well-Being sessions are conducted to employees ▪ Launched a career comeback program called Pragati for women on a & family memb
Slide 38: Financial Responsibility
Financial Responsibility Financial Responsibility Max Life has set some targets in responsible investment decision making OUR TOP COMMITMENTS IN ▪ 100% ESG integration will be ensured in all equity investment research and decision making by FY23 RESPONSIBLE INVESTMENTS ▪ 75% of equity portfolio to b
Slide 39: Green Operations
Green Operations Green Operations Conducted a carbon footprint assessment of our pan India offices. Mitigation plan currently in place to achieve the Carbon Neutrality target by FY28 Energy Management Water Conservation ▪ Home Office (HO) building is a LEED Platinum certified building with “5 ▪ All
Slide 40: Progress in key strategic shifts in ESG journey
Some progress made in our key strategic shifts identified in our ESG journey Indicators Key Metric for ESG Indicators Key Targets Current Status Digital Digital enablement (Self Servicing) in 90% of all self servicing operations to 93% self-service enablement by Operations Business transactions be d
Slide 41: Section V: MCEV Disclosures Q1 FY23
SECTION V Max Life Insurance - MCEV Disclosures: Q1 FY23
Slide 42: Key Results
Key Results The Embedded Value1 (EV) as at 30th June 2022 is Rs 14,152 Cr. The Operating Return on EV (RoEV) over Q1 FY23 is 13.5%. Including non-operating variances, the total RoEV 2 is negative 0.6%. The New Business Margin (NBM) at actual cost for Q1 FY23 is 21.1%, with Value of New Business (VNB
Slide 43: Value of New Business and New Business Margins as at 30th June 2022
Value of New Business and New Business Margins as at 30th June 2022 Description Q1 FY22 Q1 FY23 Y-o-Y growth APE 1 875 1,009 15% New Business Margin (NBM) 19.7% 21.1% 140 bps (post cost overrun) Value of New Business (VNB) 172 213 23% (post cost overrun) ▪ The New Business Margin (NBM) has increased
Slide 44: VNB and NBM Walk
Value of New Business (VNB) and New Business Margin (NBM) Walk NBM --> 19.7% - 1.4% 21.1% Note: Figures in Rs Cr. and may not add up due to rounding Investor Release 44
Slide 45: Sensitivity analysis as at 31st March 2022
Sensitivity analysis as at 31st March 2022 EV New business Sensitivity Value (Rs Cr) % change VNB (Rs Cr) | NBM % change Base Case 14,174 - 1,528 | 27.4% - Lapse/Surrender - 10% increase 14,045 (1%) 1,502 | 26.9% (2%) Lapse/Surrender - 10% decrease 14,300 1% 1,553 | 27.8% 2% Mortality - 10% increase
Slide 46: Annexures
> a ANNEXURES a
Slide 47: Performance update- 3M FY23
Performance update- 3M’FY23 Quarter Ended Q-o-Q Key Business Drivers Unit Growth Q1 FY'22 Q1 FY'23 a) Individual APE Rs. Crore 875 1,009 15% b) Gross written premium income Rs. Crore 3,484 4,103 18% First year premium 804 918 14% Renewal premium 2,244 2,619 17% Single premium 435 566 30% c) Sharehol
Slide 48: Expansion in case size and number of policies sold
Expansion in both case size and number of policies sold in 3M FY23 Case Size (INR’000) NoPs (INR’000) Non PAR- Saving PAR Ind Protection ULIP Non PAR- Saving PAR Ind Protection ULIP 646 615 76 88 131 78 69 131 168 140 140 145 219 176 24 23 25 22 81 76 79 148 66 149 111 114 25 31 106 105 107 106 147
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 30th June 2022. The VNB is calculated using the beginning of respective quarter’s risk free yield curve (i.e. 31st March 2022). ▪ No all
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. The VIF is reduced for the value of any maintenance expense overrun in the future. The overrun represents the excess maintenance expenses
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