Max Financial Services Limited · NSE:MFSL
Max Financial Services — FY2023 Earnings Presentation
57 slides from Max Financial Services's earnings presentation, May 12, 2023
Slide 1: Exchange cover letter for Investor Release Q4 FY23
May 12, 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: Corporate Announcement filed under Regulation 30 of
Slide 2: Max Financial Performance Update
Max Financial Performance Update Investor Release 12M FY23 May 12, 2023 ^As per the annual audited financials for FY21-22
Slide 3: Max Financial Services and Max Life Insurance: FY23 Key Highlights
SECTION I Max Financial Services and Max Life Insurance : FY23 Key Highlights
Slide 4: Max Financial Services: FY23 Key Highlights
Max Financial Services: FY23 Key Highlights Consolidated Revenue excluding investment income at Rs 24,940 Cr, grows 13% in FY23. Consolidated PAT at Rs Revenue 452 Cr, Up 42% In 12M FY23, New Business Premium grew by 13% to Rs 8,960 Cr Max Life Insurance Profit before Tax grew by 21% to 505Cr in FY2
Slide 5: Transaction Update
Transaction Update Current Structure (As of 31st Mar‘23) Final structure (Post completion of series of transactions step wise details given below) Max Promoter Mitsui Sumitomo Public Max Promoter Mitsui Sumitomo Public 10.1% 21.9% 68.0% 10.1% 21.9% 68.0% Max Financial Axis Max Financial Axis (MFSL)
Slide 6: 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 last 5 years 10% for life insurance industry 5-Yr CAGR of 5-Yr CAGR of Retail P
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 FY23
Financial Performance Summary FY23 Individual APE Gross Written Premium Renewal Premium AUM 13% 13% Rs 6,178 Cr 12% Rs 25,342 Cr Rs 16,382 Cr Rs 1,22,857 Cr 14% [Rs 5,514 Cr] [Rs 22,414 Cr] [Rs 14,509 Cr] [Rs 1,07,510 Cr] Net Worth Policyholder Cost to Policyholder Expense to Profit Before tax GWP R
Slide 10: Max Life has delivered consistent performance on new business
Max Life has delivered consistent performance on new business New Business Premiums (on APE basis) Renewal Income Amount in INR Cr Amount in INR Cr 6,248 16,382 5,588 14,509 4,957 12,192 4,149 10,600 3,248 8,108 FY'18 FY'20 FY'21 FY'22 FY'23 FY'18 FY'20 FY'21 FY'22 FY'23 Gross Written Premium Indivi
Slide 11: VNB tripled in 5 years aided by strong product mix
VNB tripled in 5 years aided by strong product mix, profitable products and APE growth Value of New Business- 24% CAGR growth in VNB for a 5 year period,3 year Product Mix CAGR 30% Amount in INR Cr PAR Individual Protection Group Protection NBM% Non PAR- Savings ULIP 20.2% 21.6% 25.2% 27.4% 31.2% 1,
Slide 12: Value of New Business (VNB) and New Business Margin Walk
Value of New Business (VNB) and New Business Margin (NBM) Walk NBM --> 27.4% - 3.8% 31.2% Note: Figures in Rs Cr. and may not add up due to rounding Investor Release 11
Slide 13: Efficient capital management with profitable growth
Efficient capital management with profitable growth Opex to GWP: Increased investments towards building distribution Solvency Ratio (pre dividend) 275% 207% 196% 201% 14.5% 14.2% 190% 13.5% 14.2% 12.9% 150% Solvency Limit FY'18 FY'20 FY'21 FY'22 FY'23 FY'18 FY'20 FY'21 FY'22 FY'23 Operating Return o
Slide 14: EV movement analysis: March 2022 to March 2023
EV movement analysis: March 2022 to March 2023 1,245 62 1,044 16,263 1,949 14,174 Operating RoEV: 22.1% VIF VIF 12,857 11,063 NAV NAV 3,111 3,406 Opening EV Value of Unwind Operating variance Non-Operating Closing EV New Business Variance The Operating Return on EV (RoEV) over FY22 is 22.1% Oper
Slide 15: 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 ULIP: Healthy mix of Debt and Equity AUMs, Par fund size ~59K Cr Amount in INR ‘000 Cr ULIP Controlled Fund Debt Equity 123 51% 43% 52% 54% 58% 108 90 49% 57% 48% 46% 42%
Slide 16: Max Life has been 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 Selected as In
Slide 17: Max Life Insurance – Strategy
SECTION III Max Life Insurance – Strategy
Slide 18: 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 Leader in online #5 player in offline No addition of a #5 player in FY21 proprietary
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 - Max Life has focused on maintaining a balanced distribution Proprietary Channels New Business (APE) mix. Proprietary Banca Others Amount in INR Cr 2,307 9M Q4 2,307 1% 1% 0% 0% 1% 1,611 1045 90
Slide 21: Agency: enabling top agents and variable recruiters
Agency: Strategic focus on enabling Top agents, variable recruiters; shaping the new business A models and overall digital enablement led to the growth in key agency parameters Recruitment growth over last year owing to a slew of initiatives across all Active agent and branch units productivity incr
Slide 22: Cross-selling Direct Channels
Cross-selling Direct Channels: Max Life has set up a channel focused exclusively on cross- A selling. Cross-sell engine is powered by strong analytics and robust on-ground execution New Business Premium from direct channels Cross-sell Policies - Strong growth in number of cross-sell policies Amount
Slide 23: Continued leadership in online acquisition
A Continued leadership in online acquisition APE grew 6X in 5 years FY23 Highlights New product launch – FD/RD like category Penetrated into new segments – contribute created; Best in class returns to ~20% in Term on run rate basis Savings grew 5X in FY23 Homemaker NRI Self-employed FY'18 FY'23 Onli
Slide 24: 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 in FY23 Bancassurance Offline Brokers Yella Online Brokers Investor Release 23
Slide 25: Product mix in proprietary and Bancassurance channels
B 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 PAR NPAR-S NPAR-
Slide 26: 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 27: Accelerating product innovation and new customer segments
Accelerating product innovation agenda through experiments and creating new customer B segments Millennials preferring FD/RD like Solution for self employed ULIP product for self employed /homemakers deposits Smart Fixed-return Smart Flexi Protect Smart Secure Easy Digital Plan Solution Solution Lim
Slide 28: 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 offerings Average Policyholder Age Average Policy Term Average PPT Max Life has products across all categories Product Type (Years) (Years) (Years) Endowment 3
Slide 29: Focus on retirement leading to 3x growth in Annuity business
B Focus on retirement leading to 3x growth in Annuity business in FY23 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 unt
Slide 30: 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 31: 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 32: 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) - Individual policies excluding single pay/fully paid Persistency (Policies)- Individual policies excluding single pay/ful
Slide 33: Significant progress on our Digital Journey
D Significant progress on our Digital Journey 50+ 72.8% Partners Automated Underwriting (Retail) Text 56% ~58 DIGITAL FRICTIONLESS Infra on Cloud Claims paid everyday NATIVE CUSTOMER TALENT ONBOARDING 44% <3 seconds 6L^ Insta COI (Axis) Page load time DIGITAL Text DIGITAL SALES Policies SELF-SERVE T
Slide 34: 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 35: Leveraging Digital Tech in E-Commerce Protection Sales
D Max Life is Leveraging Digital Tech & is a Leader in E-Commerce Protection Sales… 1 Combine Landing page for Online Products Home Page Store front launch Combined landing page for protection and savings Improved S2L for online channel Term S2L improvement – by 20% Savings S2L improved by 9
Slide 36: Digitizing the sales force
D Digitizing the sales Force by driving capability and Productivity 2 mSMART – Activity & lead Management ; RMS - Renewal Lead Management System mREC Enables ADM/RA’s to track and Lead Management GeoAnalytics RA dispositions & Smart Dashboards Leader hiring for create activities, goals and PRP bucke
Slide 37: Partner integration and marketplace eco-system
D Enabled end to end Integration with Axis Bank marketplace- from lead generation to policy issuance, Partner Integration marketplace & eco-system integration 3 Integration with Market Places & creating Max Life Partner Integration Eco-system Integration For KYC details and Agent document waivers Un
Slide 38: Leveraging India Stack and Account Aggregator
D 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 Eco-system Integration Sharing of Bank Statement using the Account Aggregator for Financial U/W For KYC details and
Slide 39: Building a New Age Digital customer service platform
D Building a New Age Digital customer service platform… 5 Revamped - WhatsApp Bot Revamped Website Unified Payment Platform Launched QR Code (May’23) New Help center approach with Live Agent Improved Customer Customer PortalExperience Robust & scalable payment platform Soft launch across channels ch
Slide 40: Cutting edge AI applications at scale
Implemented cutting edge AI application at scale enabling superior business outcomes across D 6 the customer touchpoints Vision AI Conversational New Business Purchase & Issuance Servicing, Retention & Others Computer AI Speech Analytics suite Vision & OCR NLP & Bots for Customer insights, Shield Ea
Slide 41: Investments in cloud and system modernization
D Investments in cloud and system modernization is helping us scale business in an agile way… 7 Cloud Data & Analytics Platform Compliance & Security Cloud Foundation Legacy Modernization Data Lake Foundation, Customer 360 & MVP Industry best Tools & process to Modernized Treasury, HR, Contact
Slide 42: Max Life Insurance – ESG
SECTION IV Max Life Insurance – ESG
Slide 43: Four pillars of our sustainability framework
Four pillars of our sustainability framework Investors Communities Regulators ESG Distribution Partners Customers Employees Investor Release 42
Slide 44: 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 45: 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, Committee Award for Best Security Practices in framework with Board risk channels
Slide 46: 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% at Launched the Visit Health app as High employee engagement - Joy of Giving: 42,500+ beneficiaries Max Life part of the holistic employee positiv
Slide 47: 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 100% compliance for equity portions of shareholders fund to be adhered to Integrating Responsible Produ
Slide 48: Green Operations
Green Operations Holistic approach Conducted a carbon footprint assessment of our pan-India offices. Striving to be carbon neutral by FY28 Energy Water Waste Management Conservation Management Home Office (HO) building is a LEED Platinum Water is recycled with the help of STP: 30 kilo MLI has pledge
Slide 49: 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 to 95% self-service enablement Operations Business transactions be digita
Slide 50: Annexures
> a ANNEXURES a
Slide 51: Expansion in case size across all products
Expansion in case size across all products Case Size (INR’000) NoPs (INR’000) PAR NPAR Protection UL PAR NPAR Protection UL 646 -5% 103 615 597 90 131 76 131 116 153 168 145 219 176 147 27 24 22 136 105 147 161 230 106 81 83 149 148 66 104 FY'21 FY'22 FY'23 FY'21 FY'22 FY'23 Investor Release 50
Slide 52: Sensitivity analysis as at 31st March 2023
Sensitivity analysis as at 31st March 2023 EV New business Sensitivity Value (Rs Cr) % change VNB (Rs Cr) | NBM % change Base Case 16,263 - 1,949 | 31.2% - Lapse/Surrender - 10% increase 16,276 0.1% 1,951 | 31.2% 0.1% Lapse/Surrender - 10% decrease 16,234 (0.2%) 1,941 | 31.1% (0.4%) Mortality - 10%
Slide 53: 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 54: 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 55: 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 56: 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 31st March 2023. The VNB is calculated using the beginning of respective quarter’s risk free yield curve (i.e. 31st March 2022, 30th Jun
Slide 57: 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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