Max Financial Services Limited · NSE:MFSL
Max Financial Services — Investor Presentation (June 2021)
50 slides from Max Financial Services's investor presentation, Jun 8, 2021
Slide 1: Max Financial Performance Update – Investor Release FY21
, mAx FINANCIAL I l NIIlk SERVICES ITMAX IFF, INSURANCE Max Financial Performance • Update Investor Release FY21 June 8, 2021 di LEAD 24th Ranked Great Place To AMTHE Work. Cent fled in India DIFFERENCE • aiakA Max Financial and AAXIS BANKJV
Slide 2: Section I: Max Financial Services FY21 Key Highlights
SECTION I Max Financial Services : FY21 Key Highlights
Slide 3: Max Financial Services: FY'21 Key Highlights
Max Financial Services : FY’21 Key Highlights 6LIFE1V1.1 X INSURANCE Axis Bank entities become Co-Promoter of Max Life with 12.99% stake. Right to acquire another 7% stake 1 Application filed with IRDAI for acquiring residual stake ~5.17% from MSI in Max Life, transaction completion expected r by Q2
Slide 4: Section II: Max Life Insurance – Business Overview
SECTION II Max Life Insurance – Business Overview
Slide 5: Industry Landscape: Max Life outperformed industry, market share 11%
)MAX MAX II Industry Landscape: Despite COVID-19 challenges, Max Life performed better than industry and recorded market share of 11% (gaining 107 bps) LIFE YoY Growth basis Individual Adjusted FYP FY’18 FY’19 FY’20 FY’21 Private Industry YoY growth 24% 1 12% 5% -I- 8% • Max Life 22.0% outperformed
Slide 6: Max Life five-year journey: consistent performance across key parameters
6 MAX II Max Life 5 year journey- Consistent performance across key parameters -.ow.LIFE INSURANCE Consistent Sales growth Total APE Protection Focus Individual Protection APE Fastest VNB growth VNB 1 Rs Cr Rs Cr Rs Cr 4,957 475 1.9% Oh 21% 1,249 2,113 64 378 FY16 FY21 FY16 FY21 FY16 FY21 Proprietar
Slide 7: Summary FY21 performance (1/3): milestones achieved
6 MAX II Summary FY21 performance (1/3): Number of milestones achieved as we progressed in the year -.ow.LIFE INSURANCE Remained ahead of Private industry’s Sales growth* A year of records, resolves and achievements • Pvt Market • Max Life 19% ✓ Successful closure of Axis transaction and renewal of
Slide 8: Summary FY21 performance (2/3): Momentum regained in Q3 and Q4
II Summary FY21 performance (2/3): Momentum regained in Q3 and Q4 FY21 6LIFE 1V1.1 X INSURANCE APE- Q4 sales grew by 36% driven both by proprietary and partnership Proprietary Channel APE- Growth momentum back in proprietary channels channels Amount in INR Cr Amount in INR Cr 1,916 22% 21% 36% 484 9
Slide 9: Summary FY21 performance (3/3): Overall Financial Performance Summary
II Summary FY21 performance (3/3): Overall Financial Performance Summary 6LIFE1V1.1 X INSURANCE Pvt Market Share Individual APE Gross Written Premium AUM 19% 11% 107 bps Rs 4,907 Cr Rs 19,018 Cr 18% Rs 90,407 Cr 32% [10%] [Rs 4,116 Cr] [Rs 16,184 Cr] [Rs 68,471 Cr] Profit After tax Net Worth Policyh
Slide 10: Strong performance on new business and renewal business
6 MAX II Max Life has delivered strong performance on both new business and renewal business; Maintained 4th rank in the private industry -vs..LIFE INSURANCE New Business Premiums (on APE basis) Renewal Income Amount in INR Cr Amount in INR Cr 15% 19% 15% 15% I, 4,957 12,192 4,149 9,415 10,600 3,950
Slide 11: NBM expanded by navigating product mix
6 MAX II NBM expanded by 360 bps by navigating product mix Product Mix – Increase in NPAR savings owing to launch of new non par Margins: Expanded by 500 bps over last three years -.ow.LIFE INSURANCE product 41% 8% 4% } 42% 9% 4% rIf 18% 38% 37% 30% 20.2% 21.7% C500 bps 21.6% 25.2% I 8% 4% 10% 5% 43
Slide 12: Efficient capital management with consistent RoE of ~20%
6 MAX II Efficient capital management with consistent RoE of ~20%, best in class among financial services ,+,LIFE INSURANCE Opex to GWP*- Cost management actions improved Opex to GWP by ~27 bps Solvency Ratio (pre dividend) - maintained well above the regulatory requirement C136bps 275% 242% 14.5% 1
Slide 13: Embedded value grew 19% in FY21 with operating RoEV of 18.5%
6 MAX II Embedded value grew by 19% in FY21 with operating RoEV of 18.5% -.ow.LIFE INSURANCE Embedded Value (EV)- EV driven by growth in value of new business and Operating Return on Embedded Value- Continue to deliver robust RoEV at quality of inforce business 18.5% Amount in INR Cr 19% 11,834 21.9
Slide 14: Max Life has consistently grown its Assets Under Management
6 MAX II Max Life has consistently grown its Asset Under Management Assets Under Management - MLI is the 4th largest manager of -.ow.LIFE INSURANCE ULIP: Healthy mix of Debt and Equity private LI AUMs, Par fund size ~47K • Debt • Equity Amount in INR ‘000 Cr 32% 51% 43% 20% 90 51% 52% 68 57% 63 49%
Slide 15: Leadership strength and vintage employee pool
6 MAX II Unwavering focus on leadership strength and has a vintage employee pool, both of which are critical for success in long term businesses such as Life Insurance -.ow.LIFE INSURANCE Great Place to Work Survey - Max Life recognized in India's Best Workplaces Employee Engagement^ - Consistently
Slide 16: Business excellence, quality and focus on people recognition
), MAX II 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 `.0 LIFE INSURANCE I • MP, Business Excellence Leaders in Quality Focus on People ▪ Won 3 awards for Best use of use of 7.15TOMER Relationship
Slide 17: Section III: Max Life Insurance – Strategy
SECTION III Max Life Insurance – Strategy
Slide 18: Significant progress made across key strategic priorities
)MAX II Significant progress made across key strategic priorities LIFE INSURANCE A d B M C D Predictable & Sustainable Digitalto Product innovation Customer centricity across the value Digitization for efficiency and growth drive margins chain intelligence ▪ Deepen Bancassurance ▪ Increase protectio
Slide 19: Growth in both Proprietary and Bancassurance channels
), MAX A `.0 LIFE Max Life has focused on ensuring growth in both its Proprietary and Bancassurance channels INSURANCE Proprietary Channels New Business (APE) •• Amount in INR Cr -Ci65" 1-- C10%.) Channel Mix - Max Life has focused on maintaining a balanced distribution 1,403 mix 1,162 1,282 891 1%
Slide 20: Product mix in proprietary and Bancassurance channels
Product mix in proprietary and Bancassurance channels aligned to customer needs; Strategic ), MAX A `.0 LIFE focus on NPAR share increase to further strengthen the balanced mix INSURANCE Proprietary Channels Product mix - biased towards traditional products and Bancassurance Product Mix - has been b
Slide 21: Complete suite of products
)MAX L B Max Life has a complete suite of products and focus is on selling longer term products along with improving penetration of pure protection offerings Average Policyholder Age Average Policy Term Average PPT LIFE Max Life has products across all categories Product Type (Years) (Years) (Years)
Slide 22: Focus on Protection: 40% increase in individual protection APE
Focus on Protection: 40% increase in individual protection APE and 34% of total individual ), MAX B `.0 LIFE policies are pure protection INSURANCE Total APE (Individual + Group) No of Protection Policies (Individual) Figures in Rs. Cr. Figures in ‘000. 731 571 256 KO 232 403 219 176 175 183 256 e 4
Slide 23: Customer measures: claims paid ratio, surrender, persistency
C Strong focus towards customer measures has helped deliver superior performance across )MAX LIFE health parameters and will continue to remain an important priority Claims Paid Ratio- One of the best claims paid ratio in the industry Surrender to GWP 179 bps 109 99.22% 99.35% 98.26% 98.74% 20% 21%
Slide 24: Claim experience on account of COVID-19
), MAX Claim experience on account of COVID-19. Impact of second wave under watch. Provisions allowed C `.0 LIFE for, on account of likely adverse experience in FY22 INSURANCE No of death claims reported (Individual + Group) COVID-19 mortality based on death month and intimations 34,391 28,309 13,21
Slide 25: Leader in E-Commerce Protection Sales
MAX Max Life Leader in E-Commerce Protection Sales enabled by higher adoption of digital assets IL D and embedded intelligence in the entire operating model LIFEINSURANCE Sharper Prospecting Personalization Growth and Awards Chase VALUE not Traffic Never Ask Again 18% 16% % of customers through ecom
Slide 26: Seamless on-boarding of customers through mPRO
Seamless on-boarding of customers through Best-in-Class On-boarding Platform (mPRO); ),MAX D `.0LIFE leveraging integration with Bank partners for customer data INSURANCE Smarter Chase B2C On-boarding Platform Frictionless Onboarding Talk to Customer the way they like Step 1,4 Ramesh. anterrizryof M
Slide 27: Customer on-boarding platform (mPRO) digital underwriting
), MAX IL D Customer on-boarding platform (mPRO) facilitating end to end digital on-boarding, smart document upload, instant OCR, automated underwriting and post sales verification No LIFE INSURANCE %IA... PRO —. . mFWD rya Active CaseS 0 0 0 0 0 11 Document Vault Lust 2 years IT :iini emer lir ecla
Slide 28: Digital ecosystem for agent recruitment (mREC)
D Industry first Digital ecosystem to drive agent Recruitment agenda at scale (mREC); end-to-end mAx IFE agent recruitment platform facilitating faster agent prospecting and on-boarding INSURANCE 11 MINIt 1111 111111 it ?11-3` 16iDEc REC REC Office View Bucket View < Ansi Saceimax fieretimentx1inn M
Slide 29: Omni-channel Customer Servicing Experience
), MAX D `.0 LIFE Omni-channel Customer Servicing Experience; services simplified through 24*7 digital offerings INSURANCE Chatbot- MILI Website- Self Servicing Website Help Center Servicing for Sellers WhatsApp MAX gPOWER cf° LI Help Centre 0 Er MAX Sign I AP Max Life Insurance = FF. Offering term
Slide 30: Leveraging Digital & AI to augment employee experience
D 6MAX LIFE Leveraging Digital & AI to augment employee experience and productivity INSURANCE empApp Workplace Ely Kudos meCube 10.52 Ale • C=J dai e i . e orkplace 5'59 Ll a MP ar activities Ely Hew Sai Kashyap N 2:7 0 Important HI Annie Tree Plantation by Pe hel Work from Office Workplace was live
Slide 31: AI smarts enhancing customer experiences and risk selection
D AI smarts delivering intelligence to enhance customer experiences and risk selection 6MAX LIFE INSURANCE Business First Integrated AI AI integration across Max Life Machine Learning New Business Purchase & Issuance Servicing & Retention & Deep Learning Applied cognitive AI technology Customized cu
Slide 32: Section IV: Max Life Insurance – ESG
SECTION IV Max Life Insurance – ESG
Slide 33: ESG Framework: benchmarks for inclusivity and sustainability
II ESG Framework: Setting benchmarks for inclusivity and sustainability 6MAX LIFEINSURANCE Environmental Social IIII Governance Replace Community Service Supervisory Board ▪ End to end digital solutions ▪ Max Life contributed 20,000 Personal ▪ Diverse Board composition Protective Equipment (PPE) kit
Slide 34: Section V: Max Life Insurance – MCEV Disclosures FY'21
SECTION V Max Life Insurance – MCEV Disclosures: FY’21
Slide 35: Key Results
II Key Results 6LIFE1V1.1 X INSURANCE The Embedded Value1 (EV) as at 31st March 2021 (post allowing for the proposed final shareholder dividend) is Rs 11,834 Cr. Before allowing for proposed final shareholder dividend, the EV is Rs 12,010 Cr. The Operating Return on EV (RoEV) over FY21 is 18.5%. Inc
Slide 36: EV movement analysis: March 2020 to March 2021
II EV movement analysis: March 2020 to March 2021 6LIFE 1V1.1 X INSURANCE EV EV 200 12,010 862 340 80 382 176 11,834 1,249 EV 9,977 •4 VIF 7,432 Operating RoEV: 18.5% VIF 9,066 VIF 9,066 NAV NAV NAV 2,545 2,945 2,769 Opening EV Value of Unwind Provisions for Operating Non-Operating Dividend paid dur
Slide 37: Value of New Business and New Business Margins as at 31st March 2021
6 MAX II Value of New Business and New Business Margins as at 31st March 2021 -.ow.LIFE INSURANCE Description FY20 FY21 Y-o-Y growth APE 1 4,149 4,957 19% New Business Margin (NBM) 21.6% 25.2% +360 bps (post cost overrun) Value of New Business (VNB) 897 1,249 39% (post cost overrun) ▪ The New Busine
Slide 38: VNB and NBM Walk
), MAX II Value of New Business (VNB) and New Business Margin (NBM) Walk `.0 LIFE INSURANCE 265 1.249 (88) 175 897 FYTD Mar'20 Impact of higher APE Change in business mix Provisions for COVID19 FYTD Mar'21 NBM --> 21.6% 1 - +5.4% -1.8% 25.2% Note: Figures in Rs Cr. and may not add up due to rounding
Slide 39: Sensitivity analysis as at 31st March 2021
)MAX MAX II Sensitivity analysis as at 31st March 2021 LIFE EV New business Sensitivity Value (Rs Cr) % change VNB (Rs Cr) | NBM % change Base Case 12,010 - 1,249 | 25.2% - Lapse/Surrender - 10% increase 11,886 (1%) 1,232 | 24.9% (1%) Lapse/Surrender - 10% decrease 12,135 1% 1,263 | 25.5% 1% Mortali
Slide 40: 6 MAX ..w IFE
6 MAX ..w IFE INSURANCE
Slide 41: Annexures
> a ANNEXURES a
Slide 42: Definitions of the EV and VNB
6 MAX II Definitions of the EV and VNB -.ow.LIFE INSURANCE 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 th
Slide 43: Components of VIF (1/2)
6 MAX II Components of VIF (1/2) -.ow.LIFE INSURANCE 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
Slide 44: Components of VIF (2/2)
6 MAX II Components of VIF (2/2) -.ow.LIFE INSURANCE 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 guara
Slide 45: Key Assumptions for the EV and VNB (1/2)
6 MAX II Key Assumptions for the EV and VNB (1/2) -.ow.LIFE INSURANCE Economic Assumptions ▪ The EV is calculated using risk free (government bond) spot rate yield curve taken from FBIL1 as at 31st March 2021. The VNB is calculated using the beginning of respective quarter’s risk free yield curve (i
Slide 46: Key Assumptions for the EV and VNB (2/2)
6 MAX II Key Assumptions for the EV and VNB (2/2) -.ow.LIFE INSURANCE 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 th
Slide 47: Consistent growth in top line and renewals with cost efficiencies
Delivering consistent growth in top line and renewals coupled with driving cost efficiencies )MAX LIFE INSURANCE Financial Performance FY18 FY19 FY20 FY21 22% 5% 19% Individual APE 3,217 3,917 4,116 4,907 15% 13% 15% 8,152 9,415 10,600 12,192 Renewal Premium 17% 11% 18% Gross Premium 12,501 14,575 1
Slide 48: Healthy and consistent profitability while maintaining solvency
Healthy and consistent profitability creating value to all the stakeholders while maintaining )MAX LIFE solvency above required levels INSURANCE Financial Performance FY18 FY19 FY20 FY21 3% -3% 5% Profit(after Tax) 528 556 539 523 20% 9% 32% 52,237 62,798 68,471 90,407 AUM 150 bps 10 bps 360 bps 20.
Slide 49: Performance update – Q4'FY21 and FY21
6 MAX II Performance update- Q4’FY21 and FY21 -.ow.LIFE INSURANCE Quarter Ended Year Ended Q-o-Q Y-o-Y Key Business Drivers Unit a) Individual APE Rs. Crore Mar’20 1,398 di= Mar’21 1,893 Growth 35% FY20 4,116 FY21 4,907 Growth 19% b) Gross written premium income Rs. Crore 5,873 7,106 21% 16,184 19,0
Slide 50: Expansion in both NOPs and Case Size
6 MAX II Expansion in both NOPs and Case Size -.....LI FE INSURANCE Case Size (INR’000) NoPs (INR’000) • Non PAR- Saving • PAR • Ind Protection • ULIP • Non PAR- Saving • PAR • Ind Protection • ULIP 645 646 69 76 597 al, to" 123 131 61 106 145 156 175 183 219 139 22 19 13 66 59 149 53 307 224 96 106
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