Max Financial Services Limited · NSE:MFSL
Max Financial Services — 9M FY22 Earnings Presentation
53 slides from Max Financial Services's earnings presentation, Jan 28, 2022
Slide 1: Max Financial Performance Update – Investor Release 9M FY22
MAX Ndk FINANCIAL SERVICES LIFE INSURANCE Max Financial Performance Update Investor Release 9M FY22 January 28, 2022 Great w LEAD THE 18th an ked Place To Work 4 Certified DIFFERENCE in India Maims A Max Financial and AAXIS BANKJV
Slide 2: Section I: Max Financial Services 9MFY22 Key Highlights
SECTION I Max Financial Services : 9MFY22 Key Highlights
Slide 3: Max Financial Services: Q3 & 9MFY22 Key Highlights
6 MAX IIMax Financial Services: Q3 & 9MFY22 Key Highlights -.ow.LIFE INSURANCE Consolidated Revenue excluding investment income at Rs 14,160 Cr, grows 21% in 9MFY22. Consolidated PBT at Rs 236 Cr, 1 lower as against previous year primarily due to COVID related provision in 9MFY22 and one-off items i
Slide 4: Section II: Max Life Insurance – Business Overview
SECTION II Max Life Insurance – Business Overview
Slide 5: Key Highlights for Max Life (1/2)
)MAX II Key Highlights for Max Life (1/2) LIFE INSURANCE Consistent growth Improved 5-Yr CAGR of 18% on Consistently maintained gm Individual new business vs market share from 04 rank#4 since last 5 years 13% of Top 3 listed life insurers 9.3% to 10.8% in 5 years New Business Margin Ja, VNB CAGR of
Slide 6: Key Highlights for Max Life (2/2)
Key Highlights for Max Life (2/2) 6MAX LIFEINSURANCE Great Places to Experienced leadership Employee metrics Asiars Best 0 Employee engagement1 Work rank #18 in FY21 Workplaces 2021 with almost half consistently among the leadership’s VW. the top decile Rank #55 among Great Places tenure with Max Li
Slide 7: Industry Landscape (9M FY22)
)MAX MAX II Industry Landscape (9M FY22): Max Life grew by 22% Y-o-Y in 9M FY22. On 2 Year CAGR, Max Life grew by 16% while private industry grew by 11%. Achieved Q3 growth of 28% YoY Growth basis Individual Adjusted FYP LIFE FY’21 9M FY’21 9M FY’22 9M FY’22 (2 year CAGR) Private Industry 6% 30% YoY
Slide 8: Financial Performance Summary 9MFY22
II Financial Performance Summary 9MFY22 6LIFE1V1.1 X INSURANCE Individual APE Gross Written Premium Renewal Premium AUM Rs 3,700 Cr 23% Rs 14,415 Cr 21% Rs 9,128 Cr 19% Rs 1,02,471 Cr 21% [Rs 3,014 Cr] [Rs 11,912 Cr] * [Rs 7,669 Cr] * [Rs 84,724 Cr] * Profit Before tax* Net Worth Policyholder Cost t
Slide 9: Performance Summary Q3 FY22
6 MAX IIPerformance Summary Q3 FY22- Max Life grew by 30% driven by strong growth across channels -.ow.LIFE INSURANCE Total APE- Robust growth across channels Proprietary APE- Increasing growth rate in proprietary channels Amount in INR Cr Amount in INR Cr 30% 8% 19% 2,158 1,594 630 28% 432 1,815 58
Slide 10: Strong performance on new business; maintained 4th rank in private industry
6 MAX II Max Life has delivered strong performance on new business ; Maintained 4th rank in the private industry -.ow.LIFE INSURANCE New Business Premiums (on APE basis)- Outperformed industry growth Renewal Income- Growth in persistency led to 19% growth in 9M FY22 Amount in INR Cr Amount in INR Cr
Slide 11: VNB increased by 20% aided by APE growth of 23%
6 MAX IIVNB increased by 20% over last year aided by APE growth of 23% Product Mix – Balanced product mix ,' LIFE Value of New Business- 20% growth in VNB on base of 37% growth last year, INSURANCE 2 year CAGR 28% Amount in INR Cr 38% 37% 33% 38% 1,249 45, 20% 897 942 18% 30% 33% 788 28% 5% } 13% }
Slide 12: Efficient capital management with profitable growth
6 MAX IIEfficient capital management with profitable growth -.ow.LIFE INSURANCE Opex to GWP* Solvency Ratio (pre dividend) 207% 208% 207% -30 bps 15.4% CD -27 bps 15.1% 196% 14.5% 14.2% 150% Solvency Limit FY20 FY21 9M FY'21 9M FY'22 FY20 FY21 9M FY'21 9M FY'22 Underwriting Profits- 9M FY’22 backboo
Slide 13: Max Life has consistently grown its Assets Under Management
6 MAX IIMax Life has consistently grown its Asset Under Management -.ow.LIFE INSURANCE Assets Under Management - MLI is the 4th largest manager of private LI AUMs, Par fund size ~52K ULIP: Healthy mix of Debt and Equity Amount in INR ‘000 Cr • Debt • Equity 43% 102 52% 55% 54% 90 85 57% 48% 45% 46%
Slide 14: Recognition for excellence in business, customer service and people
Max Life has been recognised by a number of Indian and foreign business bodies for its excellence 6MAX in business, customer service and focus on people INSURANCE Business Excellence Leaders in Quality Focus on People ▪ Awarded the Bronze for the YT connected ▪ No. 1 in Customer Loyalty ▪ Ranked 55t
Slide 15: Section III: Max Life Insurance – Strategy
SECTION III Max Life Insurance – Strategy
Slide 16: Max Life's Strategic Thrust Areas and progress made
)MAX II Max Life’s Strategic Thrust Areas and progress made LIFE INSURANCE A d B M 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 Protecti
Slide 17: Growth in both Proprietary and Bancassurance channels
), MAX A `.0 LIFE Max Life has focused on ensuring growth in both its Proprietary and Bancassurance channels INSURANCE Proprietary Channels New Business (APE) Amount in INR Cr Channel Mix - Max Life has focused on maintaining a balanced distribution mix 10% 1,403 1,282 15% 1,062 920 1% 0% 0% 0% 68%
Slide 18: Product mix in proprietary and Bancassurance channels
), MAX A `.0 LIFE Product mix in proprietary and Bancassurance channels aligned to customer needs; INSURANCE 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
Slide 19: First-in-industry product innovations
B Max Life has been at the forefront of driving Products Innovation by creating first-in-industry )MAX LIFE propositions INSURANCE 1. Break the endowments category clutter with 6. Enabled transparent customer participation 10. Hedged Guarantees with Derivatives Industry First Whole Life plan in Bond
Slide 20: Products launched in FY22
), MAX B `.0 LIFE Products launched in FY22 INSURANCE ADE FOR THOSE Max Life Smart SMART SECURE PLUS E THE VALUE OF -witrootPe CRITICAL ILLNESS Wealth Income Plan AND DISABILITY RIDER rt S fA Lift • 4/ 'SMART • 40 Sul iP SMART WEALTH INCOME PLAN P. -I- ERhS 1.11-....h.1 that loved ones. because I SE
Slide 21: Focus on protection and its risk management
L B Focus on protection and its risk management 6 MAX LIFE INSURANCE 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 under
Slide 22: Complete suite of products with focus on longer term products
B Max Life has a complete suite of products and focus is on selling longer term products along )MAX LIFE with improving penetration of pure protection offerings INSURANCE Average Policyholder Age Average Policy Term Average PPT Max Life has products across all categories Product Type (Years) (Years)
Slide 23: Customer measures: persistency and claims paid ratio
C Strong focus towards customer measures has helped deliver superior performance across )MAX LIFE health parameters and will continue to remain an important priority INSURANCE Persistency- Individual policies excluding single pay/fully paid up policies Persistency - Individual policies including sin
Slide 24: COVID-19 claim experience and provisions
)MAX L C Claim experience on account of COVID-19. Provisions allowed for probable future claims MAX LIFE 9M FY22 – Claims experience COVID-19 wave 2 – No. of Deaths and Intimations (Individual + Group) Figures in Rs. Cr. Intimation Month 2,805 Death month 1,696 Gross Claims Net Claims Jan-21 Feb-21
Slide 25: Max Life is a leading Digital Insurer in India
1V1.1 X D LIFE Max Life is a leading Digital Insurer in India INSURANCE 3 second 99.35% servicing d i Page Load Time Claims paid 111° 617.4 1 Text BEST IN CLASS BEST IN CLASS FRICTIONLESS DIGITAL NATIVE TALENT CUSTOMER ONBOARDING 49% 100% 6L# Insta claim Systems of Engagement DIGITAL Policies DIGITA
Slide 26: Max Life's Digital Strategy: Key Pillars
D )MAX LIFE Max Life’s Digital Strategy is based on 9 Key Pillars INSURANCE 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 (S
Slide 27: Key Digitization Initiatives taken in Q3 FY22
), MAX D '‘ 0 LIFE Key Digitization Initiatives taken in Q3 FY22 INSURANCE • • 11 r vyl -- - • • • AY. * • dila • .1L Prospecting & On-boarding Employee & Customer Servicing Technology Efficiency & Security ▪ Deep integration with Bank partners ▪ Launch of new HRMS system (SAP success ▪ Cloud Migrat
Slide 28: Leader in E-Commerce Protection Sales
Max Life Leader in E-Commerce Protection Sales enabled by higher adoption of digital assets )MX D ,,,LIFE and embedded intelligence in the entire operating model INSURANCE Sharper Prospecting Personalization Growth and Awards Chase VALUE not Traffic Never Ask Again " " 18% % of customers through eco
Slide 29: Seamless on-boarding through mPRO platform
Seamless on-boarding of customers through Best-in-Class On-boarding Platform (mPRO); ),MAX D No LIFE leveraging integration with Bank partners for customer data INSURANCE Smarter Chase B2C On-boarding Platform Frictionless Onboarding Talk to Customer the way they like I I:53 IMF •to EMI ale 42.6. .4
Slide 30: Omni-channel Customer Servicing Experience
Omni-channel Customer Servicing Experience; services simplified through 24*7 digital ), MAX D `.0 LIFE offerings INSURANCE Website- Self Chatbot- MILI Servicing Website Help Center Servicing for Sellers WhatsApp MAX MAX gPOWER cf° Elp Max Life Insurance MAX L On nrva tettitt Help Centre 0 iE Sign I
Slide 31: AI applications at scale across customer touchpoints
Max Life has implemented cutting edge AI application at scale enabling superior business MAX D IFE outcomes across the customer touchpoints INSURANCE New Business Purchase & Issuance Servicing & Retention Vision AI Conversational AI Speech Analytics Deep Learning • Computer Vision NLP & Bots engine
Slide 32: Building Digital Muscle through Innovation Labs
D )MX LIFE Building Digital Muscle through Innovation Labs INSURANCE MAX LIFE INNOVATION LABS Partners Use cases Shortlisted for POC Partners POC Outcome Speech Recognition 6 Kwantics A l I n s p I r ed Selected POCs are in startupindia Smart Underwriting progress and under scale- AV up phase Smart
Slide 33: Section IV: Max Life Insurance – ESG
SECTION IV Max Life Insurance – ESG
Slide 34: Four Pillars of Approach to Sustainability
Our Sustainability Strategy revolves around four pillars; aim is to make the organization 100% ESG compliant over the next 4 years Four Pillars of Approach to Sustainability Work Ethically Care for People & Sustainably & Community ▪ Robust Corporate ▪ Diversity & Inclusion Governance ▪ Employee Deve
Slide 35: Work Sustainably & Ethically | Care for People & Society
)MAX II Key Areas : Work Sustainably & Ethically | Care for People & Society LIFE INSURANCE Work Sustainably & Ethically 0 Care for People & Community Comm"PI ht Board Composition ▪ Diverse Board composition with Independent Directors in Board (~50%- MFSL; ~30%- Max Life Insurance) ▪ Average board e
Slide 36: Financial Responsibility | Green Operations
), MAX `.0 LIFE Key Areas : Financial Responsibility | Green Operations INSURANCE Financial Responsibility Green Operations Responsible Product Offerings Energy Efficiency ▪ Specially designed micro insurance products cater to socially and ▪ Home Office (HO) building is a LEED Platinum certified bui
Slide 37: Key strategic shifts in our ESG journey
)MAX LIFE Key strategic shifts in our ESG journey INSURANCE Indicators Key Metric for ESG Indicators Key Targets Digital Digital enablement (Self Servicing) in Business transactions 90% of all self servicing operations to be digital by FY25 Operations Diversity & Overall Gender Diversity Ratio Achie
Slide 38: Section V: MCEV Disclosures 9M FY22
SECTION V Max Life Insurance – MCEV Disclosures: 9M FY’22
Slide 39: Key Results
II Key Results 6LIFE1V1.1 X INSURANCE I The Embedded Value1 (EV) as at 31st December 2021 is Rs 13,412 Cr. The Operating Return on EV (RoEV) over 9M FY22 is 18.1%, which increases to 19.2% after excluding one-off impact of COVID19. Including non- I operating variances, the total RoEV is 18.2% 2. I T
Slide 40: Progression of Embedded Value
)MAX II Progression of Embedded Value LIFE INSURANCE 13,412 11,723 11,834 10,409 8,667 9,066 3,056 2,768 3,003 9M FY21 FY21 9M FY22 • Net Worth (NW) • Value of Inforce (VIF) 1. EV as at 31st December FY22 represents an increase of Rs 1,578 Cr from the EV of Rs 11,834 Cr as at FY21; implying a growth
Slide 41: Value of New Business and New Business Margins as at 31 December 2021
6 MAX II Value of New Business and New Business Margins as at 31st December 2021 -.ow.LIFE INSURANCE Description 9M FY21 9M FY22 Y-o-Y growth APE 1 3,040 3,751 23% New Business Margin (NBM) 25.9% 25.1% -80 bps (post cost overrun) Value of New Business (VNB) 788 942 20% (post cost overrun) ▪ The New
Slide 42: VNB and NBM Walk
), MAX II Value of New Business (VNB) and New Business Margin (NBM) Walk `.0 LIFE INSURANCE 184 942 -30 788 • 9M FY21 Impact of higher APE Change in business mix 9M FY22 NBM --> 25.9% - -0.8% 25.1% .• Note: Figures in Rs Cr. and may not add up due to rounding Investor Release 42
Slide 43: Sensitivity analysis as at 30th September 2021
)MAX MAX II Sensitivity analysis as at 30th September 2021 LIFE EV New business Sensitivity Value (Rs Cr) % change VNB (Rs Cr) | NBM % change Base Case 12,988 - 546 | 25.3% - Lapse/Surrender - 10% increase 12,865 (1%) 537 | 24.9% (2%) Lapse/Surrender - 10% decrease 13,125 1% 553 | 25.6% 1% Mortality
Slide 44: Annexures
> a ANNEXURES a
Slide 45: Delivering consistent growth in top line and renewals
)MAX II Delivering consistent growth in top line and renewals coupled with driving cost efficiencies LIFE INSURANCE Financial Performance FY20 FY21 9M FY’21 9M FY’22 ) 19% 23% ) Individual APE 4,116 4,907 3,014 3,700 15% 19% ) Renewal Premium 10,600 12,192 7,669 * 9,128 18% ) Gross Premium 16,184 19
Slide 46: Healthy and consistent profitability while maintaining solvency
)MAX II Healthy and consistent profitability creating value to all the stakeholders while maintaining solvency above required levels LIFEINSURANCE Financial Performance FY20 FY21 9M FY’21 9M FY’22 -0 -15% -40% ) Profit(before Tax) 598 510 436 - 263 ) AUM 68,471 32% 90,407 4E 84,724 21% 102,471 360 b
Slide 47: Performance update 9M FY22
6 MAX IIPerformance update- 9M’FY22 -.ow.LIFE INSURANCE Quarter Ended Q-o-Q Period Ended Y-o-Y Key Business Drivers Unit Q3 FY'21 Q3 FY'22 Growth 9M FY'21 9M FY'22 Growth a) Individual APE Rs. Crore 1,210 1,573 30% 3,014 3,700 23% b) Gross written premium income Rs. Crore 4,629 5,599 21% 11,912 14,4
Slide 48: Expansion in case size across all products
6 MAX IIExpansion in case size across all products -.....LI FE INSURANCE Case Size (INR’000) NoPs (INR’000) • Non PAR- Saving • PAR • Ind Protection • ULIP • Non PAR- Saving • PAR • Ind Protection • ULIP 90 8% 646 le° 10% 76 597 69 70 131 106 169 -5% 145 432 156 139 411 183 219 76 89 24 22 20 19 164
Slide 49: Definitions of the EV and VNB
6 MAX II Definitions of the EV and VNB -.ow.LIFE INSURANCE 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 th
Slide 50: Components of VIF (1/2)
6 MAX II Components of VIF (1/2) -.ow.LIFE INSURANCE 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
Slide 51: Components of VIF (2/2)
6 MAX II Components of VIF (2/2) -.ow.LIFE INSURANCE 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 guara
Slide 52: Key Assumptions for the EV and VNB (1/2)
6 MAX II Key Assumptions for the EV and VNB (1/2) -.ow.LIFE INSURANCE Economic Assumptions ▪ The EV is calculated using risk free (government bond) spot rate yield curve taken from FBIL1 as at 31st December 2021. The VNB is calculated using the beginning of respective quarter’s risk free yield curve
Slide 53: Key Assumptions for the EV and VNB (2/2)
6 MAX II Key Assumptions for the EV and VNB (2/2) -.ow.LIFE INSURANCE 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 th
Max Financial Services — 9M FY22 Earnings Presentation on 6ix