Max Financial Services Limited · NSE:MFSL
Max Financial Services — 9M FY24 Earnings Presentation
53 slides from Max Financial Services's earnings presentation, Feb 6, 2024
Slide 1: Exchange filing cover letter: Investor Release Q3 FY24
February 6, 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– Q3 FY 24 Pursuant to Regulatio
Slide 2: Max Financial Performance Update – Investor Release 9M FY24
Max Financial Performance Update Investor Release 9M FY24 February 6, 2024 *GPTW ranking as of 2021, company has not participated post 2021
Slide 3: Section I: 9M FY'24 Key Highlights
SECTION I Max Financial Services and Max Life Insurance : 9M 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: 9M FY'24 Key Highlights
Max Financial Services: 9M FY’24 Key Highlights Consolidated Revenue excluding investment income at Rs 18,398 Cr, grows 16% in 9M FY’24. Consolidated PAT at Rs 443 Cr, Up 11% y-o-y. Revenue Individual Adjusted first year Premium grew by 19% to Rs 4,285 Cr and Total APE grew by 23% driven by robust N
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 9M FY24
Financial Performance Summary 9M FY24 Total APE# Gross Written Premium Renewal Premium AUM Rs 4,561Cr 23% Rs 18,793 Cr 16% Rs 11,823 Cr 12% Rs 1,42,621 Cr 20% [Rs 3,710 Cr] [Rs 16,188 Cr] [Rs 10,548 Cr] [Rs 1,18,400 Cr] Profit After tax Net Worth Policyholder Cost to Policyholder Expense to GWP Rati
Slide 10: Q3 Update: Industry leading growth fueled by proprietary channels
Q3 Update: Continue to post industry leading growth fueled by disproportionate growth in proprietary channels & segments of choice Industry leading outcomes Growth in proprietary channels & segments of choice Individual Adj. FYP Proprietary growth (APE) Secular growth within proprietary % Q3 YOY Gro
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 4,561 16,382 6,248 11,823 10,548 3,710 14,509 5,588 FY'22 FY'23 9M FY'23 9M FY'24
Slide 12: Margin outcomes consistent with strategy of sales growth
Margin outcomes consistent with strategy of sales growth and increasing sequentially Value of New Business: Due to lower Non-Par mix & higher investments in Product Mix: Focus on Annuity and Protection & Health distribution Amount in INR Cr NBM% PAR Annuity Savings Protection & Health GROUP ULIP 27.
Slide 13: Efficient capital management with profitable growth
Efficient capital management with profitable growth Opex to GWP: Investing towards building distribution Solvency Ratio (pre dividend) 14.2% 14.3% 14.8% 201% 200% 13.5% 50 bps 190% 179% 150% Solvency Limit FY'22 FY'23 9M FY'23 9M FY'24 FY'22 FY'23 9M FY'23 9M FY'24 Operating Return on EV (RoEV): Del
Slide 14: 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 ~66K Cr ULIP: Healthy mix of Debt and Equity Amount in INR ‘000 Cr Debt Equity ULIP Controlled Fund 143 54% 58% 59% 65% 123 118 108 46% 42% 41% 35% 1
Slide 15: 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 Best Workplaces
Slide 16: Section III: Max Life Insurance – Strategy
SECTION III Max Life Insurance – Strategy
Slide 17: 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 18: 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% 2,307 1,812 1,611 1,262 62% 59% 65% 71%
Slide 19: Augmenting distribution capability across ecosystems
Max Life has been augmenting distribution capability by expanding both traditional and A emerging ecosystems Ecosystems Key partners signed by Max Life Partners added in Q1 FY24 Partners added in Q2 FY24 Partners added in Q3 FY24 Bancassurance Corporate Agents Online/Offline Brokers GCL Business Upd
Slide 20: 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 21: Products 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 22: Accelerating product innovation agenda
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 Option to get back all premiums paid Health & Savings Small cap segment back at no cost. Secure Earnings & NIFTY Small Cap Quality S
Slide 23: 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 24: 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 & Health offerings Average Policyholder Age Average Policy Term Average PPT Max Life has products across all categories Product Type (Years) (Years) (Years) En
Slide 25: Focus on retirement leading to growth in Annuity business
B Focus on retirement leading to >1.5x growth in Annuity business in 9M FY’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 ▪ Lump-sum req. for big events (child’s ▪ Regular income st
Slide 26: 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 27: 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 28: 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)- Improvement across the cohort Persistency#(NOP)- Market leader on 13th month NOP persistency 83% 85% 8M FY23 8M FY24 83%
Slide 29: Significant progress on our Digital Journey
D We had made significant progress on our Digital Journey 80+ 76.0% % servicing dig Partners Automated Underwriting (Retail) 83 Text ital 69% 64 mm DIGITAL NATIVE FRICTIONLESS Infra on Cloud Website NPS TALENT CUSTOMER ONBOARDING NOP via E-co 85% e- renewals 90% <3 seconds 4.5L Self Service Pénétrat
Slide 30: Max Life's Digital Strategy based on 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 31: Journey Interventions - Live
D Journey Interventions - Live One Capital New Document Dedicated Digital SEO real-time authoring enablement Help and Support Guarantee launch collection Page Section • Major enabler for SEO rankings • Single journey for both • Account Aggregator adoption • Dedicated section for • Real time page and
Slide 32: 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 Automation of Leader R
Slide 33: Market integration with plug and play API capability
Max Life Market integration place with plug and play API integration capability for D onboarding new partner 3 New partner Onboarding Integration with Market Places & creating Max Life Partner Integration Eco-system Integration Agent Unified Configurator Onboarding For KYC details and document waive
Slide 34: Leveraging India Stack ecosystems to simplify customer journey
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 35: 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 New Help center approach with Live Agent Digital Living Certificate – Annuity customers Robust & scalable payment platform chat, native journeys and vernacular can digitally subm
Slide 36: Cutting edge AI applications at scale
Max Life has implemented cutting edge AI application at scale enabling superior business outcomes across the customer touchpoints AI Works In-house Capabilities New Business Purchase & Issuance Servicing, Retention & Others Deep Learning Customer Vision AI Conversational Personalized actionability S
Slide 37: Investments in 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 38: Section IV: Max Life Insurance – ESG
SECTION IV Max Life Insurance – ESG
Slide 39: Four pillars of our sustainability framework
Four pillars of our sustainability framework Investors Communities ly Ca eopl ab SustWork P re e ain for Regulators resp ESG Distribution Partners io n s Finaonsib pe een ra t nci ilit Gr al y O Customers Employees Investor Release 38
Slide 40: 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 41: 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 42: 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 26.5% at Max Introduced employee discounts up- Introduced 40 hours Learning for Joy of Giving: 45000 direct beneficiaries Life to 25% with select hosp
Slide 43: 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 44: 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 45: Accomplishments in key strategic shifts in ESG journey
Accomplishments in our key strategic shifts identified in our ESG journey Indicators Key Metric for ESG Indicators Key Targets Current Status Digital 95% of digital penetration by FY26 89% for Dec’23 Digital penetration Operations Diversity & Overall Gender Diversity Ratio Achieve 28% gender diversi
Slide 46: Annexures
> a ANNEXURES a
Slide 47: Expansion in both case size and number of policies sold
Expansion in both case size and number of policies sold in 9M FY24 Case Size* (INR’000) NoP’s (000’s) Par Annuity Savings Protection & Health ULIP Par Annuity Savings Protection & Health ULIP 103 98 96 615 90 597 454 153 165 154 131 116 92 168 383 27 26 33 77 24 176 147 128 134 117 109 98 123 155 21
Slide 48: 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 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) ▪ 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 covered business.
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 December 2023. The VNB is calculated using the beginning of respective quarter’s risk free yield curve (i.e. 31st March 2023, 30th June
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. ▪ 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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