Max Financial Services Limited · NSE:MFSL
Max Financial Services — Investor Presentation (June 2022)
69 slides from Max Financial Services's investor presentation, Jun 16, 2022
Slide 1: Overview of Max Life Corporate Presentation FY22
Overview of Max Life Corporate Presentation FY22
Slide 2: Section I: Indian Life Insurance Industry so far & Looking ahead
SECTION I Indian Life Insurance Industry so far & Looking ahead
Slide 3: 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 1 – Joyful Entry Phase 2 –Expansion Phase 3 – Discovering New Normal Phase 4 – Reinvigoration Phase 5 – COVID (20
Slide 4: Private life insurance industry growth impacted in FY20 and FY21 due to COVID
Industry Landscape: Private Life insurance industry has been growing in double digits; however, growth impacted in FY20 and FY21 due to COVID YoY Growth basis Individual Adjusted FYP FY’18 FY’19 FY’20 FY’21 FY’22 FY’22 (2 Year CAGR) Private Industry YoY growth 24% 12% 5% 8% 22% 14% 22% 21% 19% 19% 1
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 5
Slide 6: Disciplined Savings (1/3): India's high savings culture
Disciplined Savings (1/3): India continues to maintain high savings culture; higher savings A proportion dedicated towards financial assets. Life Insurance among the preferred asset class Retail wealth in India - Increasing preference for avenues other than cash and High Savings Culture bank deposit
Slide 7: Disciplined Savings (2/3): Significant opportunity for Life Insurance in India
Disciplined Savings (2/3): Significant opportunity for Life Insurance to grow in India on plank of A 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 lags behind other develo
Slide 8: Disciplined Savings (3/3): Urbanization and improving affluence
Disciplined Savings (3/3): Urbanization, improving affluence, emergence of nuclear families will A continue providing impetus to the Life Insurance industry India has witnessed rapid urbanization, aids Middle class is likely to increase rapidly, especially in Top 150 cities; Top 19 cities continue t
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 gap for India is significant Protection penetration levels quite low Protection Gap (CY 2019) 83% Only 1 out of 40 76% 70%
Slide 10: Retirement Landscape: demographics and need for pension products
Retirement Landscape: Change in demographics, emergence of nuclear families and advancement C of healthcare facilities leading to pronounced need for pension products Significant annuitization opportunity- Retirement assets set to grow at India’s retirement market is under-penetrated at ~2% of GDP h
Slide 11: Section II: Business Overview
SECTION II Max Life Insurance- Business Overview
Slide 12: Max Life Insurance is a joint venture between Max Financial Services and Axis Bank
Max Life Insurance is a joint-venture between Max Financial Services and Axis Bank Strategic partnership to strengthen Max Life, bring certainty to the relationship and complement Max Life’s Brand and Financial strength, thereby benefitting Policyholders and other stakeholders 4th Largest 3rd Larges
Slide 13: Transaction Structure
Transaction Structure Final structure (Post completion of series of Earlier Structure (pre-Axis transaction) Current Structure transactions step wise details given below) Mitsui Mitsui Mitsui Max Promoter Public Max Promoter Public Max Promoter Public Sumitomo Sumitomo Sumitomo 17.3% 21.9% 60.8% 14.
Slide 14: Leading Indian and foreign investors in Max Financial Services
Leading Indian and foreign investors have reposed their faith in Max Life Insurance KEY INVESTORS of Max Financial Services Others Promoters 15% Mitsui Sumitomo Insurance 12% FDI (MSI) Ward Ferry 22% MAX FINANCIAL Baron Emerging Markets Fund SERVICES OWNERSHIP New York Life Insurance STRUCTURE Mutua
Slide 15: Max Financial Services Limited – Board of Directors
Max Financial Services Limited – Board of Directors Former Chairman of HSBC India. Serving on the Chairman and Founder Founder and Chairman of Max Group. Awarded Independent Director Board of L&T, Cipla, Nayara Energy, Lafarage Mr. Analjit Singh with highest civilian honor, the Padma Bhushan Mrs. Na
Slide 16: Extensive presence across India; 4th largest private life insurer
Max Life has an extensive presence across India through its own offices and distribution partners and is the 4th largest private Life Insurance player in the country Max Life has more ~6500 Point of Sales across the country 346 Own Branch Units 4th Largest 6000+ Partner Private Life Insurer^ Branche
Slide 17: Road map to becoming India's most admired life insurance company
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 18: Max Life's experienced and versatile Board of Directors
Max Life has a highly experienced and versatile Board of Directors providing strong and secure foundation Seasoned professional with 25 years of Chairman and Founder Founder and Chairman of Max Group. Awarded Director experience in Corporate Finance and Investment Mr. Analjit Singh with highest civi
Slide 19: 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 : 15+ years Prashant Tripathy Total Experience: 25+ years Managing Director & CEO Previous Organizations: Tata Steel, GE V Viswanand Manu Lavanya Rahul Talwar
Slide 20: Key Highlights and achievements for Max Life (1/2)
Key Highlights and achievements for Max Life (1/2) 4 Improved 5-Yr CAGR of 16% on Consistently maintained Individual new business market share rank#4 from Consistent growth vs since last 5 years 10% for life insurance industry 9.2% to 9.9% in 5 years Prop channels growth 5 year CAGR of Retail protec
Slide 21: Key Highlights and achievements for Max Life (2/2)
Key Highlights and achievements for Max Life (2/2) Employee metrics Great Places to Experienced leadership Employee engagement1 Work rank #18 in FY21 with almost half score of >95% the leadership’s for last 3 years Rank #55 among Great Places tenure with Max Life to Work in Asia in FY21 more than a
Slide 22: Strong performance on new business; maintained 4th rank
Max Life has delivered strong performance on new business ; Maintained 4th rank in the private industry on APE, 3rd in individual sum assured New Business Premiums (on APE basis) Renewal Income- Growth in persistency led to YoY growth of 19% Amount in INR Bn Amount in INR Bn 145 56 122 50 106 41 81
Slide 23: VNB more than tripled in 5 years
VNB more than tripled in 5 years aided by strong APE growth, balanced product mix and cost optimization Value of New Business- 25% CAGR growth in VNB for a 5 year period,2 year Product Mix – Increase in NPAR savings and protection over last 5 years CAGR 31% Amount in INR Bn 15 12 30% 9 38% 37% 37% 4
Slide 24: Efficient capital management with profitable growth
Efficient capital management with profitable growth Opex to GWP* - Constant improvement in Opex Solvency Ratio (pre dividend) 309% 275% 14.8% 14.5% 207% 14.2% 196% 201% 13.5% 150% 12.9% Solvency Limit FY17 FY18 FY20 FY21 FY22 FY17 FY18 FY20 FY21 FY22 Operating Return on EV (RoEV) – Delivering consis
Slide 25: 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 ~530 Bn ULIP: Healthy mix of Debt and Equity Amount in INR Bn Debt Equity 1,075 54% 51% 43% 52% 54% 904 49% 57% 48% 46% 46% 685 741 FY17 FY18 FY20 FY2
Slide 26: 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 recognized in India's Best Workplaces Employee Engagement^ - Consistently amongst top decile in BFSI 20
Slide 27: 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 Gold for Lead Generation No. 1 in Customer Loyalty Ranked 55th amongst ‘2021 campai
Slide 28: Section III: Business Strategy
SECTION III Max Life Insurance: Business Strategy
Slide 29: Strategic pillars with emphasis on long term imperatives
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 Proprietary Channels New Business (APE) Amount in INR Bn Channel Mix - Max Life has focused on maintaining a balanced distribution mix 16 14 13 1% 1% 1% 0% 0% 9 8 71% 72% 68% 71% 71% FY17 FY18 FY20 FY21 FY22
Slide 31: 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 productivity increased
Slide 32: Digital Tools Across the Value Chain
A Max Life’s Agency is enabled with digital assets end-to-end across the value chain Recruitment Learning Lead Generation Prospecting On boarding Servicing Digital Tools Across the Value Chain Integration of career seminar Lead lifecycle tracking with On-The-Go Visibility of Management of Self & opt
Slide 33: 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 34: Continued leadership in online acquisition
A Continued leadership in online acquisition APE grew 6X in 5 years Key Success Factors SEO Leadership Seamless integration with partners Partner Portal Best in class conversion FY'17 FY'22 Innovation Hub Analytics Online 8% 21% Customers New Category creation (Housewife) Leadership position in prot
Slide 35: Bancassurance partners continue to contribute strongly
A Bancassurance partners continue to contribute strongly Axis Bank: Axis bank grew by CAGR of 18% over last five years Banca channels have grown at CAGR of 16% while increasing branch Amount in INR Bn 15% productivity 36 Amount in INR Bn 31 24 19 16 12% FY17 FY18 FY20 FY21 FY22 40 Branches (#) 3,304
Slide 36: Augmenting distribution through emerging ecosystems
Max Life has been augmenting distribution capability by participating in the emerging A ecosystem opportunity to get access to large customer pools Ecosystems Key partners signed by Max Life Wealth Tech Max Life works with 30+ partners in emerging Web aggregators ecosystems These partnerships co
Slide 37: Balanced product mix aligned to customer needs
Balanced Product mix aligned to customer needs; Strategic focus on NPAR savings and A protection share increase to further strengthen the product mix and drive margins Proprietary Channels Product mix - biased towards traditional products and Bancassurance Product Mix - has been biased towards ULIPs
Slide 38: 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 10. Hedged Guarantees with Derivatives Industry First Whole Life plan in Bonds with First Index-L
Slide 39: Product suite for all customer segments across 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 40: Focus on long term protection 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 APE- More than quadrupled over a 5 year period Figures in INR Bn Unde
Slide 41: Retirement: focus on becoming a leading annuity provider
Retirement: Focus to become one of the largest annuity providers and become the retirement B preferred player for >45 years segment Extended insights to IRIS launch with V2.0 in TM Q2’22 5000+ respondents with insights on health, emotional, financial preparedness for tomorrow 2.0 Enhanced medi
Slide 42: Risk management measures for 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 cashflow (interest ra
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 2019 2020 1st to introduce 1st to launch 1st to launch 1st to launch Speed 1st to launch ‘Buy Flexible Cash Service promise & InstaClaim™ Dial Partner for Life now,
Slide 44: Max Life is among the leading digital insurers in India
D Max Life is among the leading Digital Insurer in India 50+ 74% Partners Automated Underwriting (Retail) Text 46% ~84 DIGITAL FRICTIONLESS Infra on Cloud Claims paid everyday NATIVE CUSTOMER TALENT ONBOARDING 41% <3 seconds Page load time >6L Insta COI (Axis) DIGITAL Text DIGITAL SALES Policies SEL
Slide 45: Digital Strategy is based on 9 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 46: Leveraging Digital Tech & leader in e-commerce protection sales
D Max Life is Leveraging Digital Tech & is a Leader in E-Commerce Protection Sales… 1 New Unified Platform Progressive Web App (PWA) (Transformed to newer experience) PWA Launched with Push Notifications for user engagement and wider reach. Early Adoption in Ecom journey and Roadmap for extensio
Slide 47: Digitizing the sales force
D We are digitizing the sales Force by driving capability and Productivity 2 mSMART Smart Class AWE & Y.E.S Intelligent nudges on next best action Enables ADM to track and create monthly plan, activities, goals and PRP Virtual Training for Agents Sales management system for partnership Channels Did
Slide 48: Cloud native issuance and underwriting system
D …Enabled by a state-of-the-art cloud Native issuance and underwriting system, Integration with Bank marketplaces & eco-system integration. 3 Dolphin Scale-Up Integration with Market Places Eco-system Integration For KYC details and document waivers Waiver of Financial Document Integration with TPA
Slide 49: Omni channel customer service platform
D We are Building a New Age Omni Channel customer service platform… 4 Revamped Website Revamped Customer Communications Omni Channel Customer Service Customer Portal Centralized communication Management One view for all servicing touch points System Did You Know 40 % + efficiency increased in agent
Slide 50: Cutting edge AI applications at scale
Max Life has implemented cutting edge AI application at scale enabling superior business D 6 outcomes across the customer touchpoints New Business Purchase & Issuance Servicing & Retention Speech Analytics Conversational AI engine for Customer Deep Learning Customer Engagement, Retention Vision AI N
Slide 51: Investments in cloud and system modernization
D Our investments in cloud and system modernization is helping us scale business in an agile way… 7 Cloud Data & Analytics Platform Cloud Foundation Legacy Modernization Data Lake Foundation & Customer 360 Agility in operations support Modernized Treasury, HR, Data stores consolidation and r
Slide 52: InsureTech ecosystem: Innovation Labs
D 9 InsureTech ecosystem: Building Digital Muscle through Innovation Labs Ecosystem Partners Use cases Shortlisted for POC Digital Partners (>150) POC Outcome Speech Recognition Selected POCs are in Smart Underwriting progress and under scale- up phase Smart hiring / training of Agents / Sales force
Slide 53: Success measures of our vision (2-3 Years)
D Success measures of our vision (2-3 Years) Key Digital Initiatives Customer Distribution Employee Selling Recruitment, Onboarding and Skilling Productivity Tools <3 Sec 15% Page Load Time Session to quote 10% 99% 90% 80% (New Age Common Improvement in Agent / ADM Digital Training Certification Col
Slide 54: Focus on augmenting Human Capital
E Focus on augmenting Human Capital to drive superior Org outcomes Key Focus areas to drive superior Org outcomes Innovation Speed & Simplicity Values focus Agile Cross Functional teams Extensively leverage Digital Max Life Insurance 54
Slide 55: Strategic focus areas and bold aspirations
Max Life has identified strategic focus areas for future and has set bold aspirations around those 1 Leader in online customer acquisition 2 Build fastest growing profitable proprietary distribution 3 Leader in Protection + Health & Wellness proposition 4 Leader in Retirement (among top 3) 5 Explore
Slide 56: Section IV: ESG
> SECTION IV > ESG a
Slide 57: Sustainability Framework built around four pillars
The Sustainability Framework at Max Life is built around four pillars with key focus areas Four Pillars of Approach to Sustainability Work Ethically & Sustainably Care for People Corporate Governance Diversity & Inclusion Ethics & Compliance Employee Development Digital Initiatives Healt
Slide 58: Work Sustainably and Ethically
Work Sustainably and Ethically Work Sustainably & Ethically Governance Data Privacy & Security Dedicated ESG Management Committee in place from 2021 MLI received the DSCI Excellence Award for Best Security Practices in Appointed ESG Head to oversee ESG initiatives and actions in the India in 2
Slide 59: Care for People and Community
Care for People and Community Care for People & Community Diversity & Inclusion Health & Wellness Current gender diversity ratio at 25% at Max Life Counselling & Mental Well-Being sessions are conducted to employees Launched a career comeback program called Pragati for women on a & family memb
Slide 60: Financial Responsibility
Financial Responsibility Financial Responsibility Max Life has set some targets in responsible investment decision making OUR TOP COMMITMENTS IN 100% ESG integration will be ensured in all equity investment research and decision making by FY23 RESPONSIBLE INVESTMENTS 75% of equity portfolio to b
Slide 61: Green Operations
Green Operations Green Operations Conducted a carbon footprint assessment of our pan India offices. Mitigation plan currently in place to achieve the Carbon Neutrality target by FY28 Energy Management Water Conservation Home Office (HO) building is a LEED Platinum certified building with “5 All
Slide 62: Progress made in key strategic shifts in ESG journey
Some progress made 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 92% self-service enablement by Operations Business transactions be d
Slide 63: Section V: MCEV Disclosures
SECTION V Max Life Insurance – MCEV Disclosures: FY’21
Slide 64: Key Results
Key Results The Embedded Value1 (EV) as at 31st March 2022 is Rs 141.74 Bn. The Operating Return on EV (RoEV) over FY22 is 19.2%, which increases to 20.1% after excluding one-off impact of COVID19. Including non- operating variances, the total RoEV is 19.8% 2. The New Business Margin (NBM) at actual
Slide 65: EV movement analysis: March 2021 to March 2022
EV movement analysis: March 2021 to March 2022 10.25 2.77 EV 0.64 141.74 15.28 EV 118.34 Operating RoEV: 19.2% VIF VIF 90.66 110.63 NAV NAV 27.68 31.11 Opening EV Value of Unwind Operating variance Non-Operating Closing EV New Business Variance The Operating Return on EV (RoEV) over FY22 is 19.2%,
Slide 66: Value of New Business and New Business Margins as at 31st March 2022
Value of New Business and New Business Margins as at 31st March 2022 Description FY21 FY22 Y-o-Y growth APE 1 49.57 55.88 13% New Business Margin (NBM) 25.2% 27.4% +220 bps (post cost overrun) Value of New Business (VNB) 12.49 15.28 22% (post cost overrun) The New Business Margin (NBM) has increas
Slide 67: VNB and NBM Walk
Value of New Business (VNB) and New Business Margin (NBM) Walk 1.21 15.28 1.59 12.49 NBM --> 2.2% 27.4% 25.2% - Note: Figures in Rs Bn. and may not add up due to rounding Max Life Insurance 67
Slide 68: Sensitivity analysis as at 31st March 2022
Sensitivity analysis as at 31st March 2022 EV New business Sensitivity Value (Rs Cr) % change VNB (Rs Cr) | NBM % change Base Case 141.74 - 15.28 | 27.4% - Lapse/Surrender - 10% increase 140.45 (1%) 15.02 | 26.9% (2%) Lapse/Surrender - 10% decrease 143.00 1% 15.53 | 27.8% 2% Mortality - 10% increase
Slide 69: Thank you
INSURANCE Thank you
Max Financial Services — Investor Presentation (June 2022) on 6ix