Max Financial Services Limited · NSE:MFSL
Max Financial Services — Investor Presentation (May 2024)
71 slides from Max Financial Services's investor presentation, May 29, 2024
Slide 1: Investor Presentation filing letter to BSE and NSE
May 29, 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 Presentation Pursuant to Regulation 30 of S
Slide 2: Max Life Insurance Corporate Presentation
Max Life Insurance Corporate Presentation ^Individual Death Claims Paid Ratio as per IRDAI Annual Report FY 2022-23 *GPTW ranking as of 2021
Slide 3: Section I: Indian Life Insurance Industry so far & Looking ahead
SECTION I Indian Life Insurance Industry so far & Looking ahead
Slide 4: Life insurance industry has seen multiple cycles since 2001
Life insurance industry has seen multiple cycles since 2001. Structural changes in the economy have resulted in positive flow towards financial assets aiding the insurance industry Phase 4 –Regulatory Phase 1 – Joyful Entry & Industry Expansion Phase 2 – Discovering New Normal Phase 3 – Reinvigorati
Slide 5: Life Insurance is a business of Risk Management
Life Insurance is a business of Risk Management; plays available for Life Insurers include Disciplined savings, Mortality & Morbidity and Longevity z A B C Disciplined savings Mortality & Morbidity Longevity Max Life Insurance 4
Slide 6: Disciplined Savings & growing consumption (1/4)
A Disciplined Savings & growing consumption (1/4): India continues to maintain high savings culture; higher savings proportion dedicated towards financial assets. Life Insurance among the preferred asset class Financial Savings flow in India – Life insurance a preferred asset Savings rate consistent
Slide 7: Disciplined Savings & growing consumption (2/3): opportunity for Life Insurance
A Disciplined Savings & growing consumption (2/3): Significant opportunity for Life Insurance to grow in India on plank of ensuring disciplined savings over a long term – Only asset class effective in addressing the gap Gap between other countries and India is significant for Life Insurance India la
Slide 8: Disciplined Savings & growing consumption (3/3): household income
A Disciplined Savings & growing consumption (3/3): Improving affluence, Household income increase will continue providing impetus to the Life Insurance industry 2010 2019 2030 Avg. HH income1 (Mn p.a) 3.9 5.2 1.5 X 7.3 Annual gross HH income1 Number and % of households (M) in different income bracke
Slide 9: Protection Landscape: India has the highest protection gap in Asia
Protection Landscape: India has the highest protection gap in Asia with low protection B penetration levels; long term protection and health opportunity attractive Protection gap1 for India is significant Term Awareness at an all time high* Awareness % Ownership % 91%2 76% IPQ 6.0 conducted in 70%
Slide 10: Retirement Landscape: India undergoing demographic transition
Retirement Landscape: India undergoing a rapid demographic & economic transition – moving C towards an aging society, majority of them facing the risk of living too long Rising Elderly Population Increased Life Expectancy Rest of population >Age 60 72 130 Mn 180 Mn 300 Mn 70 69 10% 12% 18% 66 Retire
Slide 11: Section II - Business Overview
SECTION II Max Life Insurance- Business Overview
Slide 12: Corporate Structure
Corporate Structure Final structure (Post completion of series of transactions KEY INVESTORS of Max Financial Services Current Structure (As of Apr‘24) step wise details given below) Mitsui Sumitomo Insurance Mitsui Mitsui Max Promoter Public Max Promoter Public Sumitomo Sumitomo Mirae Asset Global
Slide 13: Max Financial Services Limited Board of Directors
Max Financial Services Limited – Highly experienced and versatile Board of Directors providing strong and secure foundation Global partner, leads Consumer Market Practices Chairman and Founder Founder and Chairman of Max Group. Awarded Independent Director for Heidrick & Struggles in India. Key pers
Slide 14: Max Life Board of Directors
Max Life Board of Directors: Max Life has a highly experienced and versatile Board of Directors providing strong and secure foundation Deputy Managing Director at Axis Bank. He has Seasoned professional with experience of over Chairman Non-executive Director also served as the MD & CEO of Axis Asset
Slide 15: Max Life road map to becoming India's most admired life insurer
Max Life Insurance’s road map to becoming India’s most admired life insurance company Vision To be the most admired life insurance company by securing the financial future of our customers Inspire People to increase the Value of their Life Purpose “I am the Difference” Quality of Advice Value Driven
Slide 16: Consistent growth since inception, 15% average y-o-y growth
Consistent growth since its inception, reporting an average y-o-y growth of 15% in the last 5 years Total Premium in INR Bn FY19-FY24 CAGR: 15% First Year Premium Renewal Premium 295 253 224 190 185 162 164 146 145 125 108 122 92 106 81.72 94 66.38 72.79 63.91 81 58.13 71 48.61 38.57 63 110 50 56 27
Slide 17: Extensive presence across India through own offices and distribution partners
Max Life has an extensive presence across India through its own offices and distribution partners Max Life has 8700+ Point of Sales across the country 477 Own Branch Units >9% Private market 8300+ Partner share^ Branches# 100K+ Agents 100+ Distribution #1 Claims Paid ratio in industry Partners #3 In
Slide 18: 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 Consistent leadership Asset Under Management at Individual new business1 position in vs INR 1.5 Trillion, CAGR of 19% over online protection; 10% for Total life Consistent Growth last 5 years Rank 3 on Retail Sum insurance industry assu
Slide 19: Key Highlights for Max Life (2/2)
Key Highlights for Max Life (2/2) Experienced leadership2 Employee metrics with half of 13th best place for data scientists the leadership’s to work for within India Certified Great Places to Work1 tenure with Max Life of by Analytics India Magazine more than a decade Customer Company NPS3 at Indust
Slide 20: Max Life has delivered strong business performance
Max Life has delivered strong business performance New Business Premiums (on APE basis) –Driven by strong growth in across Renewal Income – Delivering consistent growth channels Amount in INR Bn Amount in INR Bn 74.3 14% 13% 185.1 13% 19% 163.8 62.5 145.1 55.9 39.5 94.2 FY'19 FY'22 FY'23 FY'24 FY'19
Slide 21: Best in class margin outcomes consistent with sales growth strategy
Best in class Margin outcomes consistent with strategy of sales growth Product Mix: Focus on Annuity and Protection & Health Value of New Business: Due to lower Non-Par mix & distribution investments Amount in INR Bn PAR Annuity NPAR Savings Protection & Health GROUP ULIP NBM% 21.7% 31.2% 27.4% 31.2
Slide 22: Efficient capital management with profitable growth (solvency)
Efficient capital management with profitable growth Solvency Ratio (Pre-dividend): At 206% post primary issue of INR 1,612 cr Opex to GWP: Investing towards building distribution capital to Axis 242% 13.5% 14.2% 13.8% 13.2% 201% 190% 172% 150% Solvency Limit FY'19 FY'22 FY'23 FY'24 FY'19 FY'22 FY'23
Slide 23: Efficient capital management: EV progression and Operating RoEV
Efficient capital management with profitable growth EV progression: Grew at a CAGR of~17% Operating RoEV Amount in INR Bn 21.9% 22.1% 19.2% 20.2% 194.9 162.6 141.7 89.4 FY19 FY22 FY23 FY24 FY'19 FY'22 FY'23 FY'24 Embedded Value movement: March 2023 to March 2024 Amount in INR Bn 13.7 (0.6) (0.5) 194
Slide 24: Assets Under Management reached INR 1.5 Trillion
Max Life has consistently grown its Asset Under Management1, reached INR 1.5 Trillion Assets Under Management1 - MLI is the 4th largest* manager of private LI AUMs and Largest Par fund* AUM of ~677 Bn Linked: Healthy mix of Debt and Equity Amount in INR Billion Debt Equity Linked Traditional 1,510 5
Slide 25: Leadership strength and vintage employee pool
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 Great Place to Work Survey# - Max Life improved its ranking in India's Best Workplaces in BFSI 2021. Employee Engagement^ - Consistently amon
Slide 26: Executive Management Team has rich insurance experience
Executive Management Team has rich insurance experience and spent ~100 years at Max Life combined Max Life Management Team Stint in Max : 17 years Prashant Tripathy Total Experience: 29 years Managing Director & CEO Previous Organizations: Tata Steel, GE Sumit Madan Manu Lavanya Rahul Talwar J
Slide 27: 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 Awarded Excellence in driving distribution No. 2 in Customer Loyalty survey by Hansa Research
Slide 28: Section III: Business Strategy
SECTION III Max Life Insurance: Business Strategy
Slide 29: Max Life will continue to focus on chosen strategic pillars
Max Life will continue to focus on its chosen strategic pillars with emphasis on long term imperatives A B C D E Predictable and Product innovation to Customer centricity across Digitization for efficiency Augment human capital sustainable growth drive margins the value chain and intelligence Digita
Slide 30: 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 Bn 1% 0% 1% 2% 29.6 21% 23.1 16.1 11.6 62% 58% 70% 71%
Slide 31: Proprietary channels have grown 2.5x between FY19-24
A Proprietary (Offline + Online) channels have grown by 2.5x times between FY19-24 with bias to drive margins Proprietary Channels Product mix - biased towards traditional products for driving margins, FY24 UL increase led by buoyant market Offline Proprietary: On a normalized basis1 offline prop. g
Slide 32: Offline Proprietary: top agents and quality recruitment
Offline Proprietary: Strategic focus on enabling top agents, quality recruitment along with Recruitment growth over last year owing to a slew of initiatives across all Active agent and branch units productivity increased over the last 5 years recruitment sources Agent and Branch Productivity1 34* Nu
Slide 33: Online Proprietary: leadership in online protection
Online Proprietary: Continued leadership in online protection business and second largest A player in online savings; APE grew 7X in 5 years Key Highlights Amount in INR Bn 6.9 1.0 Industry first #1 among Insurers Younger Customers 2.1M Brand Banca D2C Digital (median of 32 vs 37 for Organic Traffic
Slide 34: Bancassurance partners continue to contribute strongly
A Bancassurance partners continue to contribute strongly Bancassurance Product Mix - has been biased towards Savings & ULIP to cater to target customer segments Axis Bank: Axis bank grew at a CAGR of 11% between FY19-24 Amount in INR Bn PAR Annuity NPAR Savings Protection & Health ULIP 35.7 10% 38.3
Slide 35: Forefront of 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 Break the endowments category clutter with Enabled transparent customer participation Hedged Guarantees with Derivatives Industry First Whole Life plan in Bonds with First Index-Linke
Slide 36: Product suite at affordable premiums for all life stages
Max Life offers product suite at affordable premiums to cater to all customer segments across B various life-stage needs Young Adults / Married with newly Married with Life stages Single Married born kid/kids older Kid/ kids Retirement <25 years 25 to 35 years 30 to 40 years 40 to 55 years 45+ years
Slide 37: 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 38: 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 39: Complete suite of products focused 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 40: Focus on retirement leading to 59% growth in Annuity
B Focus on retirement leading to 59% growth in Annuity business in 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 stream
Slide 41: Long term protection opportunity and comprehensive health portfolio
Max Life will continue to focus on long term protection opportunity and build a comprehensive B health portfolio; focus on risk-based, underwriting driven segmented offerings Key focus areas to win in protection Total Protection & Health APE* Amount in INR Bn Underwriting: Superior underwriting au
Slide 42: Robust risk management against interest rate risk and longevity
Max Life has adopted robust risk management measures to hedge its portfolio against interest B rate risk and longevity Product design & mix monitoring Prudent ALM approach Hedging 1• Prudent pricing assumptions 1• Cash flow matching of assets and 1• Managing the asset liability cash (interest rates,
Slide 43: Industry-first customer-centric initiatives
C Max Life has launched several industry-first customer-centric initiatives Industry-first customer centric initiatives 2001 2012 2016 2020 2023 2024 1st to introduce 1st to launch 1st to launch 1st to launch ‘Buy Launched Whats app Flexible Cash Service promise & service bot. Enables us to 1st to l
Slide 44: Digital Strategy based on 7 Key Pillars
D Our Digital Strategy is Based on 7 Key Pillars & we aim to be India’s Leading Digital First Insurer 1 2 3 4 5 New Business Scale E-Commerce Digital Agency Models & Digital CX Platform Digital EX Platform Business Partnerships 6 Data & Analytics 7 Modern, Scalable & Flexible Technology Platform Per
Slide 45: Significant progress on our Digital Journey
D Significant progress on our Digital Journey Text 81% 90% Automated Underwriting (Retail) FRICTIONLESS DIGITAL NATIVE CUSTOMER API Coverage - Partner integration TALENT ONBOARDING 64 75% Website NPS (Purchase + CS) 7L+ DIGITAL Infra on Cloud Text DIGITAL SALES Policies SELF-SERVE Text <3 seconds Is
Slide 46: Leveraging Digital Tech, Leader in E-Commerce Protection Sales
D Leveraging Digital Tech & is a Leader in E-Commerce Protection Sales… 1 New Mandate Page NFO Launch AXIS SFRD • New mode for auto-pay – UPI-SI • UPI auto pay SR at >50% • Small Cap NFO • Axis SFRD Journey first 4 • UPI auto pay contribution to 35% • Midcap NFO Click journey • Mandate attachment im
Slide 47: Significantly digitalized our Sellers
D Significantly digitalized our Sellers to enable them to win… 2 Sales Governance for Integrated Lead Intelligent quotes on Unified Learning & Mobile First all channels Funnel the go Training Management Recruitment app– ~0.35+ million+ activities ~0.13 million+ meeting ~0.8+ million quote 59% adopti
Slide 48: API Building: digitalizing alternate channels and partners
Significant progress in digitalizing Alternate channels, onboarding customers seamlessly and D integrating new partners through plug and play API suite… 3 Onboarding D2C Journeys with API Suite Tele and NRI PASA Journey Banks and Partners API Building Reusable APIs D2C Journeys available for ~ 5 Min
Slide 49: Building a New Age Digital customer experience platform
D Building a New Age Digital customer experience platform 4 Website Unified Payment Platform Group Claims Revamped - WhatsApp Bot Industry first initiative of Group claim workflow handling GCL, GTL and Website NPS has also improved 10 points Enables us to serve our customers in 8 Payment transaction
Slide 50: Leveraging Digital & AI to augment employee experience
D Leveraging Digital & AI to augment employee experience and productivity 5 empApp DISHA (Success Factor Viva Engage Ely Emplus meCube App) Employee App with self service An employee communication Empuls is the employee Mobile based search to Entire hire to retire lifeycle modules for Leave manageme
Slide 51: India Stack and Insurtech partnerships
D India Stack and Insurtech partnerships to accelerate the digitalization 6 Improve Distribution Reach via Plug & Play Platforms Augment Retention, Customer Service & Claims Experiences for New Business Sales Leveraging Bharat Stack for Auto-Filling & Consent Data Augmentation Leverage Alternate Dat
Slide 52: AI & analytics capabilities across the value chain
D AI & analytics capabilities have made significant inroads across the life insurance value chain 7 Incremental Business Impact FY24 YTD New Business Enablement Sourcing Risk Avoidance Incremental Renewal Collection Margins enablement • Self serve insights on mortality • Propensity campaigns for Ban
Slide 53: Agile, Scalable & Resilient Technology Platform
D We are building a Agile, Flexible, Scalable & Resilient Technology Platform to Digitally power MLI Data & Analytics Platform Compliance & Security Cloud Foundation Legacy Modernization Data Lake Foundation - Data availability @ 60% on cloud DevSecOps - Vulnerability Management Multi Cloud Ad
Slide 54: Recognitions across global and domestic industry forums
D Won various recognitions across top global and domestic industry forums ETBFSI – AWS AI AIM AI Celent Global CYPHER – Top 50 Best Firms for Data Nasscom AI Game 40 Under 40 AI ML Paper/Case Exceller Conclave- Innovation Model Insurer Domestic Scientist - 23 Changers Award data scientists study pub
Slide 55: Max Life's 5-Year Aspirations (FY26)
Max Life’s 5-Year Aspirations 1 2 Fastest growing profitable 3 Leader in Protection + 4 5 Leader in online acquisition Health & Wellness Leader in Retirement Inorganic expansion proprietary distribution proposition #5 player1 in offline #5 player1 in Protection and No addition of a material FY21 Lea
Slide 56: Section IV: ESG
> SECTION IV > ESG a
Slide 57: ESG: Four pillars of our sustainability framework
Four pillars of our sustainability framework Investors Communities Regulators ESG Distribution Partners Customers Employees Max Life Insurance 56
Slide 58: Four pillars of our sustainability framework
Four pillars of our sustainability framework 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 Digit
Slide 59: 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 60: 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 27% at Introduced CARS for a digitalized 2024 sustainable engagement score Employee volunteering initiatives: 60,200 Max Life employee helpdesk experi
Slide 61: Financial Responsibility
Financial Responsibility Committed to responsible investments ESG evaluation 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 Responsibl
Slide 62: 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 Replacement of CFL with LED lights ong
Slide 63: Accomplishments in key strategic shifts of 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 Digital penetration 89% for March 24 Operations Diversity & Overall Gender Diversity Ratio Achieve 28% gender diver
Slide 64: Annexures
> a ANNEXURES a
Slide 65: Expansion of number of policies sold a key driver for FY24
Expansion number of policies sold to be a key driver for FY24 Case Size* (INR’000) NoP’s (000’s) Par Annuity NPAR Savings Protection & Health ULIP Par Annuity NPAR Savings Protection & Health ULIP 103 102 715 645 90 153 163 615 165 597 123 168 131 116 61 27 34 189 24 110 175 139 134 147 176 123 40 1
Slide 66: Sensitivity analysis as at 31st March 2024
Sensitivity analysis as at 31st March 2024 EV New business Sensitivity Value (INR Bn) % change VNB (INR Bn) | NBM % change Base Case 194.9 - 19.7 | 26.5% - Lapse/Surrender - 10% increase 196.4 0.8% 19.6 | 26.4% (0.6%) Lapse/Surrender - 10% decrease 193.2 (0.9%) 19.8 | 26.6% 0.4% Mortality - 10% incr
Slide 67: 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 68: 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 69: 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 70: 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 March 2024. The VNB is calculated using the beginning of respective quarter’s risk free yield curve (i.e. 31st March 2023, 30th June 202
Slide 71: 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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