Max Financial Services Limited · NSE:MFSL

Max Financial Services — Investor Presentation (November 2018)

45 slides from Max Financial Services's investor presentation, November 2018

  1. Slide 1: Max Financial Services Limited Investor Presentation November 2018

    Max Financial Services Limited Investor Presentation November 2018

  2. Slide 2: Max Group Vision

    Max Group Vision “To be the most admired corporate for service excellence” 2

  3. Slide 3: Evolution of Max Group

    Evolution of Max Group—Strong history of entrepreneurship and nurturing successful businesses NYL exits and JV with Max India demerged into Fund raising ~ USD 360 Mn MSI in 2012 3 listed hold cos Enters Telecom in JV ● QIP- USD 156 Mn in 2007 ● MSI is world’s 7th largest with Hutchison ● Warburg Pin

  4. Slide 4: Max Group – Corporate Structure

    Max Group – Corporate Structure Max Group ‐ Sponsors 30.3% 41.0% 47.2% Companies Holding Life Insurance Health & Allied Real Estate, Manufacturing & Business Business Other businesses 50% 51% 70.75% Companies Operating 51% 100% 100% 100% 100% Group CSR Arm Sponsors stake in Max Group holding compani

  5. Slide 5: Max Group – Senior Management

    Max Group – Senior Management Rahul Khosla • Group President • Chairman, Max India Limited • Executive President, Max Financial Services • Chairman, Max Healthcare Institute Ltd Mohit Talwar Rajesh Sud • Managing Director, Max India Limited • Executive Vice Chairman & MD, Max Life Insurance • Managi

  6. Slide 6: Max Group Overview

    Max Group Overview 1 USD 3 billion Revenues… 10 Mn Customers… 25,000 Employees… ~80,000 Agents 2 Strong growth trajectory even in challenging times; a resilient & diversified business model 3 Steady revenue growth and cost rationalization leads to strong financial performance 4 Well established boar

  7. Slide 7: Max Group: Continues to grow from strength to strength

    Max Group : Continues to grow from strength to strength Group Revenue (USD Mn) 2,946 2,584 1,915 2,190 1,639 FY'14 FY'15 FY'16 FY'17 FY'18 Group EBITDA (USD Mn) 127 129 95 110 81 FY'14 FY'15 FY'16 FY'17 FY'18 Note: Adjusted for one‐offs for conversion assumed 1 USD = INR 65 7

  8. Slide 8: High pedigree of long term investor base

    High pedigree of long term investor base Shareholding concentrated with Marquee Investors  KKR  Baron Emerging Market Fund Shareholding Pattern as on 30th Sep 18  Aberdeen Public  Vanguard 10.7%  Wasatch Promoter 30.3%  Jupiter FII‐ Others 21.8%  Norway Government Pension Fund  Reliance Mutu

  9. Slide 9: Max Life Insurance Company Limited

    Max Life Insurance Company Limited

  10. Slide 10: Key Summary Messages

    Key Summary Messages Indian Life Insurance Industry has evolved rapidly; significant headroom still 1 available for growth due to low penetration and favorable demographic profile Max Life is well positioned to leverage this opportunity with its eminent Board, 2 strong management team and robust gov

  11. Slide 11: Overview of Life insurance industry in India

    Overview of Life insurance industry in India Phase 1 Phase 2 Phase 3 Joyful Entry (2001‐2003) Expansion (2004‐2008) Discovering New Normal (2009 onwards) 57% 56% 54% 50% 52% 52% 49% 46% 36% 37% 38% 38% Ind. Adj. FYP (First Year Premium) 34% (In Rs 000 Cr) Private market share in 25% terms of Ind. Ad

  12. Slide 12: Industry Landscape (Q1 FY'19): Max Life recorded strong growth

    Industry Landscape (Q1 FY’19): Max Life recorded strong growth (+15%) as compared to Industry growth (+6%) and Private growth (5%) YoY Growth basis Individual Adjusted FYP FY’17 FY’18 Q1’ FY18 Q1’ FY19 Private Industry YoY growth 26% 24% 45% 5% Industry Max Life 29% 25% 25% 21% 19% 19% 15% 6% Max Li

  13. Slide 13: Significant potential to expand both in savings and protection segment

    Significant potential to expand both in savings and protection segment Life Insurance Penetration (Premium as % of GDP), 2017 Level of Protection (Sum Assured as % of GDP), 2015* 17.9% 260% 14.6% 226% ~ 16% ~ 10 Bps increase increase from 2016 149% from 2016 6.6% 6.3% 96% 76% 2.7% 2.8% China India S

  14. Slide 14: Highly experienced and versatile Board of Directors

    Highly experienced and versatile Board of Directors providing strong and secure foundation Founder and Chairman Founder and Chairman of Max Seasoned business manager with Chairman Emeritus India. Awarded with highest wide domain expertise built over civilian honor, the Padma Bhushan Mr. Rahul Khosla

  15. Slide 15: Executive Management team with rich experience of insurance

    Executive Management team with rich experience of insurance and strong Governance Mechanism Executive Vice Chairman and MD  Total Experience: 25 years Max Life Management Team  Previous Organizations: Rajesh Sud* Bank of America, ABN AMRO , ANZ Grindlays (17 years) Tenure at Max Life Sr Director a

  16. Slide 16: Long Term strategy is driven by our vision

    Long Term strategy is driven by our vision to be the “Most Admired Life Insurance Company” What are we known for » Quality of advice » Human Capital and Leadership depth To be the most admired life insurance company by securing the financial future of our customers » Differentiated distribution capa

  17. Slide 17: Our Strategy: Strengthen multi-channel architecture and leverage technology

    Our Strategy: Strengthen multi‐channel architecture and leverage technology to continue profitable growth 1  Superior financial performance with profitable growth Continue to chase profitable growth  Balanced product mix with focus on long term saving and protection proposition  Superior customer

  18. Slide 18: Financial Performance Summary Q1' FY19

    1 Financial Performance Summary Q1’ FY19 Pvt Market Share* Individual APE Gross Written Premium AUM^ 17% 9% 77 bps Rs 552 Cr Rs 2,320 Cr 16% Rs 53,940 Cr 3% [8%] [Rs 472 Cr] [Rs 2,007 Cr] [Rs 52,237 Cr] Profit Before tax^^ Net Worth^ Embedded Value^ Policyholder Expense to GWP Ratio 165 bps 15.0% Rs

  19. Slide 19: Delivering consistent growth in top line and renewals

    Delivering consistent growth in top line and renewals coupled with driving cost efficiencies Financial Performance FY 17 FY18 Q1’ FY18 Q1’ FY19 22% 3,215 15% 2,639 527 Ind Adj. FYP 458 15% 16% 7,114 8,152 1,342 1,554 Renewal Premium 16% 12,501 16% 2,320 10,780 2,007 Gross Premium Policyholder expens

  20. Slide 20: Healthy and consistent profitability creating value

    Healthy and consistent profitability creating value to all the stakeholders while maintaining solvency above required levels Figures in Rs. Cr. Financial Performance FY 17 FY18 Q1’ FY18 Q1’ FY19 20% 14% Profit(before Tax) 768 615 106 91 18% 18% 44,370 52,237 45,871 53,940 AUM 140 bps 10 bps 18.8% 20

  21. Slide 21: Assets under management - Y-o-Y growth at 18%

    Assets under management‐ Y‐o‐Y growth at 18% Rs in Cr Linked fund vs Controlled fund Debt vs Equity Debt portfolio exposure to AAA rated debt is well above the regulatory requirement of 75% AUM Size has grown more than Rs 50,000 Crore Investor Release 21

  22. Slide 22: Balanced product mix with enhanced focus on long term saving and protection

    Balanced product mix with enhanced focus on long term saving 1 and protection contribution PAR Individual Protection Group Protection Non PAR‐ Savings ULIP 30% 28% 41% 41% 9% 7% 3% 8% 4% 7% 8% 6% 13% 5% 4% 9% 4% 8% 16% 7% 54% 51% 43% 38% FY 17 FY 18 Q1' FY 18 Q1' FY 19 Product mix basis total APE (i

  23. Slide 23: Focus on Protection

    1 Focus on Protection 32% of total individual new business policies are protection Figures in Rs. Cr. Figures in ‘000. Total APE (Individual + Group) No of Policies (Individual) 256 189 120 93 99 114 67 78 137 58 96 39 33 41 25 29 FY 17 FY18 Q1' FY 18 Q1' FY 19 FY 17 FY 18 Q1' FY 18 Q1' FY 19 Indivi

  24. Slide 24: Balanced product mix with focus on long tenor life coverage

    1 Balanced product mix with focus on long tenor life coverage Average Policyholder Average Policy Term Average PPT* Product Type Age (Years) (Years) (Years) Endowment 35 24 11 ULIP 37 14 10 Whole Life 36 64 52 Money back 28 17 16 Pure Term 35 32 32 GMIP/GIP 43 19 9 Health 39 16 16 Cancer Insurance 3

  25. Slide 25: Superior customer outcomes and retention

    Superior customer outcomes and retention with continuous 1 improvement across all quality parameters High quality business franchise Steady retention capabilities Conservation Ratio* Surrender to GWP 92% 91% 32% 89% 90% 24% 21% 20% FY17 FY18 Q1' FY 18 Q1' FY 19 FY17 FY18 Q1' FY 18 Q1' FY 19 Continuo

  26. Slide 26: Comprehensive multi-channel distribution with consistent contribution from proprietary channels

    Comprehensive multi‐channel distribution with consistent 2 contribution from proprietary channels Proprietary Axis Bank Other Banks Others 1% 1% 1% 1% 12% 13% 15% 12% 16% 26% 49% 52% 58% 59% 19% 17% 35% 36% 29% 27% FY 17 FY18 Q1' FY18 Q1' FY19 Distribution mix basis Ind. APE ; Arrow represents growt

  27. Slide 27: Channelize efforts and investments towards growth in Proprietary channel

    Channelize efforts and investments towards growth in 2 Proprietary channel 1L 2L Agency office expansion Variable agency cost model  Increase in offices by leveraging  Significant expansion of IMF existing infrastructure channel  Selectively expand in higher  Drive recruitment and affluent geogr

  28. Slide 28: Highly efficient and productive agency channel and strong banca relationships

    Highly efficient and productive agency channel and strong banca 2 relationships with consistent growth Highly efficient and productive agency channel with focus on quality of advice Active Agent productivity (Rs ‘000 pm) Branch productivity (Rs Lakhs pm) 83.9 85.7 26.9 81.5 24.4 22.2 69.3 19.7 FY17

  29. Slide 29: Using digital technologies to harness data and analytics

    3 Using digital technologies to harness data and analytics for more efficient sales processes and better customer experience  Transforming Digital 4 1  Digital Marketing & Interface ecommerce Higher customer Smarter lifetime value Acquisition Digital technologies to power 4 3 Value driver 2 Better

  30. Slide 30: Digital penetration growing rapidly across all customer touchpoints

    3 Digital penetration growing rapidly across all customer touchpoints Key Business Lever Performance Update Online Sales through Website 1 (New Sales incl through Nudge 93% YoY Growth in New Business models) 2 15% YoY growth in customer traffic Digital Traffic on Website 19% on www.maxlifeinsurance.

  31. Slide 31: Life Insurance business management retooled across the enterprise

    3 Life Insurance business management retooled across the enterprise Prospecting & Solution Fulfillment Servicing Generation 10K+ 85% 40% Agents continue using the lead of all policies applied through of all active user base are using generation tool every month automated tool servicing tool month on

  32. Slide 32: EV movement analysis from March 2017 to March 2018

    EV movement analysis from March 2017 to March 2018 641 62 47 196 7,706 197 7,509 656 6,590 VIF VIF 5,028 VIF 5,028 Operating RoEV: 20.6% 4,192 NAV NAV NAV 2,398 2,678 2,481 Opening EV Value of Unwind Operating Non‐Operating Dividend paid Closing EV Final proposed Closing EV New Business variance Var

  33. Slide 33: Key Results – Embedded Value and VNB Disclosure for Q1FY19

    Key Results – Embedded Value and VNB Disclosure for Q1FY19 The Embedded Value1 (EV) as at 30th June 2018 is Rs 7,645 Cr. The annualized Operating Return on EV (RoEV) over Q1 FY19 is circa 15.0%. Due to the sales being skewed towards later part of the year and investments being made by the Company in

  34. Slide 34: Awards and recognitions for Max Life

    Awards and recognitions for Max Life CELENT MODEL INSURER AWARD in the Asia Pacific Region Best Life Insurance Best business leader – Best use of six sigma in company Sumit Rai banking and financial sector ‐ Insta claim (1 day approval) 34

  35. Slide 35: Awards and Accolades

    Awards and Accolades 1 Setting higher benchmark with every award  Ranked 43rdd amongst India’s top 50 best companies appeared in list of Great Place to Work for 2018  Recognized by Employee Engagement Leadership Award in the category of “Best use of the Employee Award”. And “Best Social Responsibi

  36. Slide 36: Thank you

    INSURANCE Thank you

  37. Slide 37: Annexure

    OMAXiguiee OM INSURANCE Annexure

  38. Slide 38: Max Life maintains 4th rank among private players

    Max Life maintains 4th rank among private players Individual new business premium (Rs Cr) Rank Company Q1FY19 Q1FY18 Growth (%) Private Market Share (%) 1 ICICI Prudential Life 1,282 1,636 ‐22% 21.0% 2 SBI Life 1,204 1,108 9% 19.7% 3 HDFC Standard Life 812 687 18% 13.3% 4 Max Life 526 458 15% 8.6% 5

  39. Slide 39: Performance update - Q1'FY19

    Performance update‐ Q1’FY19 Quarter Ended Key Business Drivers Unit Y‐o‐Y Growth Jun'17 Jun'18 a) Individual Adjusted Premium Rs. Crore 458 527 15% b) Gross written premium income Rs. Crore 2,007 2,320 16% First year premium 453 536 18% Renewal premium 1,342 1,554 16% Single premium 212 230 9% c) Sh

  40. Slide 40: Overview of the components of the EV as at 30th June 2018

    Overview of the components of the EV as at 30th June 2018 VIF Net worth and EV Market value of Shareholders’ owned assets over liabilities Time value of financial options Cost of residual and guarantees non‐hedgeable risks Frictional cost Net Worth Rs 2,504 Cr TVFOG Rs 21 Cr CRNHR Present Rs 716 Cr

  41. Slide 41: Value of New Business and New Business Margins as at 30th June 2018

    Value of New Business and New Business Margins as at 30th June 2018 Description Q1 FY18 Q1 FY19 Y‐o‐Y growth APE 1 478 558 17% New Business Margin (NBM) 22.2% 23.5% +130 bps (before cost overrun) New Business Margin (NBM) 18.0% 18.1% +10 bps (post cost overrun) Value of New Business (VNB) 86 101 17%

  42. Slide 42: Sensitivity analysis as at 31st March 2018

    Sensitivity analysis as at 31st March 2018 EV New business Sensitivity Value (Rs Cr) % change VNB (Rs Cr) | NBM % change Base Case (before final SH dividends) 7,706 ‐ 656 | 20.2% ‐ Lapse/Surrender ‐ 10% increase 7,562 (2%) 620 | 19.1% (5%) Lapse/Surrender ‐ 10% decrease 7,859 2% 694 | 21.4% 6% Morta

  43. Slide 43: 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 30th June 2018. The VNB is calculated using the beginning of respective quarter’s risk free yield curve (i.e. 31st March 2018).  No all

  44. Slide 44: 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. The VIF is reduced for the value of any maintenance expense overrun in the future. The overrun represents the excess maintenance expenses

  45. Slide 45: MAX Insurance

    MAX INSURANCE

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