Max Financial Services Limited · NSE:MFSL
Max Financial Services — H1 FY2024 Earnings Presentation
56 slides from Max Financial Services's earnings presentation, Oct 31, 2023
Slide 1: Investor Release Q2 FY24 cover letter to exchanges
October 31, 2023 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 24 Pursuant to Regulatio
Slide 2: Max Financial Performance Update
Max Financial Performance Update Investor Release 6M FY24 October 31, 2023 *GPTW ranking as of 2021, company has not participated post 2021
Slide 3: Section I: 6M FY'24 Key Highlights
SECTION I Max Financial Services and Max Life Insurance : 6M FY’24 Key Highlights
Slide 4: Transaction Update
Transaction Update Proposed Structure Final structure Current Structure (Post preferential issue of Max Life shares to Axis) (Post exercise of 0.98% right by Axis) Mitsui Mitsui Max Promoter Public Max Promoter Public Max Promoter Mitsui Sumitomo Public Sumitomo Sumitomo 6.5% 71.6% 6.5% 71.6% 6.5% 2
Slide 5: Max Financial Services: 6M FY'24 Key Highlights
Max Financial Services: 6M FY’24 Key Highlights Consolidated Revenue excluding investment income at Rs 11,221 Cr, grows 16% in H1 FY24. Consolidated PAT at Rs 271 Cr, Up 109% y-o-y. Revenue In H1 FY24, Individual Adjusted first year Premium grew by 20% to Rs 2,525 Cr driven by robust NOP growth of 2
Slide 6: Section II: Max Life Insurance – Business Overview and Financials Update
SECTION II Max Life Insurance – Business Overview and Financials Update
Slide 7: Key Highlights for Max Life FY18-23 (1/2)
Key Highlights* for Max Life FY18-23 (1/2) 1 5-Yr CAGR1 of 13% on Asset Under Management at Individual new business Consistent leadership position in Rs 1.23 lac cr, CAGR of 19% over Consistent growth vs online protection & Health last 5 years 10% for life insurance industry 5-Yr CAGR of 5-Yr CAGR o
Slide 8: Key Highlights for Max Life FY18-23 (2/2)
Key Highlights for Max Life FY18-23 (2/2) Employee metrics Great Places to Experienced leadership1 Work rank #18 in FY21 with almost half Employee engagement2 the leadership’s score of >95% Rank #55 among Great Places tenure with Max Life of for last 4 years to Work in Asia in FY21 more than a decad
Slide 9: Financial Performance Summary H1 FY24
Financial Performance Summary H1 FY24 Total APE# Gross Written Premium Renewal Premium AUM Rs 2,766 Cr 26% Rs 11,496 Cr 16% Rs 7,215 Cr 11% Rs 1,34,161 Cr 18% [Rs 2,200 Cr] [Rs 9,904 Cr] [Rs 6,526 Cr] [Rs 1,13,352 Cr] Profit Before tax Net Worth Policyholder Cost to Policyholder Expense to GWP Ratio
Slide 10: Q2 Update: Industry best outcomes led by robust growth across channels
Q2 Update: Industry best outcomes led by robust growth across channels driven by unwavering commitment towards our strategic thrust areas and product innovations Industry leading outcomes Secular growth across channels Focus on Annuity and Protection & Health Individual Adj. FYP Banca growth (APE) 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 APE basis) –Driven by strong growth in across Renewal Income – Delivering consistent growth channels Amount in INR Cr Amount in INR Cr 2,766 16,382 7,215 6,248 6,526 5,588 14,509 2,200 FY'22 FY'23 H1 FY'23 H1 FY'24 F
Slide 12: Consistent VNB growth supported by strong product mix
Consistent VNB growth supported by strong product mix, profitable products and APE growth Product Mix: Focus on Annuity and Protection & Health Value of New Business: Consistent growth in VNB Amount in INR Cr NBM% PAR Annuity Savings Protection & Health GROUP ULIP 27.4% 31.2% 26.7% 24.0% 27% 30% 37%
Slide 13: Value of New Business (VNB) and New Business Margin (NBM) Walk
Value of New Business (VNB) and New Business Margin (NBM) Walk NBM 26.7% 0.0% -2.7% 24.0% Note: Figures in Rs Cr. and may not add up due to rounding Investor Release 12
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) 201% 196% 15.1% 30 bps 15.4% 190% 184% 13.5% 14.2% 150% Solvency Limit FY'22 FY'23 H1 FY'23 H1 FY'24 FY'22 FY'23 H1 FY'23 H1 FY'24 Operating Return on EV (RoEV): Del
Slide 15: EV movement analysis: March 2023 to September 2023
EV movement analysis: March 2023 to September 2023 706 (3) 282 17,911 663 16,263 Operating RoEV: 17.5% VIF VIF 14,153 12,857 NAV NAV 3,406 3,759 Opening EV Value of Unwind Operating variance Non-Operating Closing EV New Business Variance The Operating Return on EV (RoEV) over H1 FY24 is 17.5%. O
Slide 16: 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 ~63K Cr ULIP: Healthy mix of Debt and Equity Amount in INR ‘000 Cr Debt Equity ULIP Controlled Fund 54% 58% 56% 62% 134 123 113 108 46% 42% 44% 38% F
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 No. 2 in Customer Loyalty survey by Hansa Research Ranked 55th amongst ‘2021 Awarded at The
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 - Focused on maintaining a balanced distribution mix Proprietary Channels New Business (APE)* Proprietary Bancassurance Others Amount in INR Cr 0% 1% 1% 2,307 1,096 2% 1,611 773 62% 64% 59% 71% F
Slide 21: Augmenting distribution capability across ecosystems
Max Life has been augmenting distribution capability by expanding both traditional and A emerging ecosystems Ecosystems Key partners On-boarded Bancassurance Offline Partners Yella Online Partners Investor Release 20
Slide 22: 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 Savings & ULIP to protection & Health for driving margins cater to target customer segments
Slide 23: 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 24: Accelerating product innovation through experiments
Accelerating product innovation agenda through experiments and creating new customer B segments Benefits to cater to need of death, Industry 1st Index fund focusing on Millennials preferring FD/RD like Health & Savings Small cap segment deposits Secure Earnings & NIFTY Small Cap Quality Smart Fixed-
Slide 25: Industry First All-in-One product for Health, Wellness, Savings and Life
B Industry First offering of an All-in-One product for Health, Wellness Savings and Life Secure Earnings and Wellness Advantage Plan (SEWA) MaxCustomized Max Fit App: Fit App: Customized Wellness Offering Wellness Offering AN INDUSTRY FIRST: “ALL IN ONE PRODUCT” HEALTH WELLNESS LIFE SAVINGS Industry
Slide 26: Complete suite of 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 & 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: Focus on retirement leading to >3x growth in Annuity
B Focus on retirement leading to >3x growth in Annuity business in H1FY’24 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 Lumpsum req. for big events (child’s Regular income stream
Slide 28: Focus on protection and its risk management
B Focus on protection and its risk management Customer Profiling and Selection Experience monitoring Profitability & Risk Management Regular portfolio review/ Post issuance AI based risk models, Credit Bureaus, IIB Regular repricing of products verification Database deployed in underwriting ri
Slide 29: 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 30: 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# (Premium)- 25th month persistency improved by 188 BPS Persistency#(NOP)- Market leader on 13th month NOP persistency 84% 84% 5M FY2
Slide 31: Significant progress on our Digital Journey
D We had made significant progress on our Digital Journey 80+ 76.0% Partners Automated Underwriting (Retail) Text 65% 63 DIGITAL NATIVE FRICTIONLESS Infra on Cloud Website NPS TALENT CUSTOMER ONBOARDING 24% <3 seconds ~3L Insta COI (Axis) Page load time DIGITAL Text DIGITAL SALES Policies SELF-SERVE
Slide 32: Max Life's Digital Strategy: 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 33: Journey Interventions - Live
D Journey Interventions - Live 1 Max Fit App Account Aggregator Native NFO - Launch – Small Cap Fund • 22% adoption rate on the eligible base • Industry first Small cap NFO Launch • 90% fetch rate of financial data • Category Building Capital Guarantee App experience Avail Health services • 91% Accu
Slide 34: Digitizing the sales force
D We are digitizing the sales Force by driving capability and Productivity 2 mSaarthi – New Learning mSMART – Activity & lead Management ; RMS - Renewal Lead Management System mREC Management System Lead Management and Enables ADM/RA’s to track and Smart Dashboards Geo Fencing Leader hiring for Rene
Slide 35: New partners on-boarded; Axis Bank marketplace integration
…New Partners on-boarded in record time, enabled end to end Integration with Axis Bank marketplace- D from lead generation to policy issuance, Partner Integration marketplace & eco-system integration 3 New partner Onboarding Integration with Market Places & creating Max Life Partner Integration Eco-
Slide 36: New partners on-boarded; ecosystem integration
…New Partners on-boarded in record time, enabled end to end Integration with Axis Bank marketplace- D from lead generation to policy issuance, Partner Integration marketplace & eco-system integration 3 New partner Onboarding Integration with Market Places & creating Max Life Partner Integration Eco-
Slide 37: Leveraging India Stack and Account Aggregator ecosystem
We are leveraging the ecosystems built on the India Stack to simplify the customer journey. We have integrated with the AA Ecosystem for sharing financial documents with customer consent 4 FIU Integrations* Eco-system Integration Sharing of Bank Statement using the Account Aggregator for Financial U
Slide 38: Building a New Age Digital customer service platform
D We are Building a New Age Digital customer service platform… 5 Revamped - WhatsApp Bot Website Unified Payment Platform (Beta launch) New Help center approach with Live Agent Digital Living Certificate – Annuity customers Robust & scalable payment platform chat, native journeys and vernacular can
Slide 39: Cutting edge AI application at scale
D Max Life has implemented cutting edge AI application at scale enabling superior business 6 outcomes across the customer touchpoints AI Works In-house Capabilities New Business Purchase & Issuance Servicing, Retention & Others Deep Learning Customer Vision AI Conversational Personalized actionabili
Slide 40: Cloud and system modernization
Our investments in cloud and system modernization is helping us scale business D in an agile way… 7 Cloud Data & Analytics Platform Compliance & Security Cloud Foundation Legacy Modernization Data Lake Foundation build with data availability Industry best Tools & process to Agility in operatio
Slide 41: Section IV: Max Life Insurance – ESG
SECTION IV Max Life Insurance – ESG
Slide 42: Four pillars of our sustainability framework
Four pillars of our sustainability framework Investors Communities Regulators Distribution Partners Customers Employees Investor Release 41
Slide 43: Four pillars of our sustainability framework (contd…)
Four pillars of our sustainability framework (contd…) 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 Managem
Slide 44: Work Sustainably and Ethically
Work Sustainably and Ethically Governance Data Privacy & Security Risk Management Compliance & Policies Dedicated ESG Management MLI received the DSCI Excellence Max Life has a robust governance Platforms, mechanisms, channels in Committee Award for Best Security Practices in framework with Board ri
Slide 45: Care for People and Community
Care for People and Community Diversity & Inclusion Well-being of Employee Development CSR Initiatives Employees & Policies Gender diversity ratio at 26.4% at Max Launched the Visit Health app as part of 200+ OTRs have been Joy of Giving: 21000+ beneficiaries positively Life the holistic employee we
Slide 46: Financial Responsibility
Financial Responsibility Committed to responsible investments 100% ESG integration will be ensured in all equity investment research and decision making 75% of equity portfolio to be ESG compliant at all times 100% compliance for equity portions of shareholders fund to be adhered to Integrating Resp
Slide 47: Green Operations
Green Operations Holistic approach Conducted a carbon footprint assessment of our pan-India offices. Measurement of GHG emissions of DLF Square and 90C for FY 2022-23 To reduce carbon emissions by 80% by 2028 Energy Water Waste Management Conservation Management Dry and wet waste segregation process
Slide 48: Accomplishments in key strategic shifts in our ESG journey
Accomplishments 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 95% self-service enablement by Operations Business transactions to be dig
Slide 49: Annexures
> > ANNEXURES a
Slide 50: Expansion in case size and number of policies sold in 6M FY24
Expansion in both case size and number of policies sold in 6M FY24 Case Size* (INR’000) NoP’s (000’s) Par Annuity Savings Protection & Health ULIP Par Annuity Savings Protection & Health ULIP 103 93 615 90 90 597 153 151 290 131 116 168 148 27 59 241 31 24 26 176 147 55 134 107 82 108 123 65 155 213
Slide 51: Sensitivity analysis as at 30th September 2023
Sensitivity analysis as at 30th September 2023 EV New business Sensitivity Value (Rs Cr) % change VNB (Rs Cr) | NBM % change Base Case 17,911 - 663 | 24.0% - Lapse/Surrender - 10% increase 17,960 0.3% 665 | 24.1% 0.3% Lapse/Surrender - 10% decrease 17,845 (0.4%) 659 | 23.8% (0.6%) Mortality - 10% in
Slide 52: 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 53: 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 54: 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 55: 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 2023. The VNB is calculated using the beginning of respective quarter’s risk free yield curve (i.e. 31st March 2023 and 30th J
Slide 56: 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
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