Max Financial Services Limited · NSE:MFSL
Max Financial Services — Investor Presentation (June 2023)
69 slides from Max Financial Services's investor presentation, Jun 15, 2023
Slide 1: Max Life Insurance Corporate Presentation
Max Life Insurance Corporate Presentation VENKATRAM Digitally signed by VENKATRAMAN KRISHNAN *GPTW ranking as of 2021, company has not participated post 2021 AN KRISHNAN Date: 2023.06.15 10:07:16 +05'30'
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 4 –Regulatory Phase 1 – Joyful Entry & Industry Expansion Phase 2 – Discovering New Normal Phase 3 – Reinvigorati
Slide 4: 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 5: Disciplined Savings (1/3): India continues to maintain 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 6: 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 7: Disciplined Savings (3/3): Improving affluence and household income
Disciplined Savings (3/3): Improving affluence, Household income increase will continue A providing impetus to the Life Insurance industry 2010 2019 2030 Avg. HH income1 (Lakhs.p.a) 3.9 5.2 1.5 X 7.3 Annual gross HH income1 Number and % of households (M) in different income brackets (INR Lakhs.p.a)
Slide 8: 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 83% 76% (CY 2019) ▪ Only 1 out of 40 70%
Slide 9: Retirement Landscape: India undergoing rapid 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 The growth of the elderly population in India is outpacing the growth of Decli
Slide 10: Section II: Business Overview
SECTION II Max Life Insurance- Business Overview
Slide 11: Transaction Structure
Transaction Structure KEY INVESTORS of Max Financial Services Final structure (Post completion of series of Current Structure (As of 31st Mar‘23) transactions step wise details given below)# Mitsui Sumitomo Insurance Mirae Asset Global Mitsui Mitsui Capital Group Max Promoter Public Max Promoter Pub
Slide 12: Max Financial Services Limited – Board of Directors
Max Financial Services Limited – Board of Directors Global partner, leads Consumer Market Practices Chairman and Founder Founder and Chairman of Max Group. Awarded Independent Director for Heidrick & Struggles in India. Key person in Mr. Analjit Singh with highest civilian honor, the Padma Bhushan M
Slide 13: Max Life has an extensive presence across India
Max Life has an extensive presence across India through its own offices and distribution partners Max Life has ~8500 Point of Sales across the country 397 Own Branch Units ~9% Private market 8100+ Partner share^ Branches #1 Claims Paid ratio in industry ~70K Agents ~70 Distribution Partners ~1.2 Tn
Slide 14: Max Life Insurance's 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 15: Max Life has a highly 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 16: 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 : 16+ years Prashant Tripathy ▪ Total Experience: 27+ years Managing Director & CEO ▪ Previous Organizations: Tata Steel, GE V Viswanand Manu Lavanya Rahul Talwar
Slide 17: 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 Tn, 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 Prote
Slide 18: 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 FY217 more than a deca
Slide 19: 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 Bn Amount in INR Bn 62.5 16.4 55.9 14.5 49.6 12.2 41.5 10.6 32.5 81.1 FY'18 FY'20 FY'21 FY'22 FY'23 FY'18 FY'20 FY'21 FY'22 FY'23 Gross Written Premium Individual Sum Assur
Slide 20: 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 Bn NBM% PAR Annuity NPAR Savings NPAR Protection GROUP ULIP 20.2% 21.6% 25.2% 27.4% 31.2% 27% 19.5 38% 37
Slide 21: Efficient capital management with profitable growth (1/2)
Efficient capital management with profitable growth (1/2) 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 Underwriting
Slide 22: Efficient capital management with profitable growth (2/2)
Efficient capital management with profitable growth (2/2) EV progression: Grew at a CAGR of*~20% Operating Return on EV (RoEV) – Delivering consistent healthy returns Amount in INR Bn 162.6 22.1% 141.7 118.3 20.6% 20.3% 99.8 75.1 19.2% 18.5% FY18 FY20 FY21 FY22 FY23 FY'18 FY'20 FY'21 FY'22 FY'23 EV
Slide 23: 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 ~590 Bn Amount in INR Tn ULIP Controlled Fund Debt Equity 1.2 51% 43% 52% 54% 58% 1.1 0.9 49% 57% 48% 46% 42% 0.9
Slide 24: Unwavering focus on 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 Employee Engagement^ - Consistently amongst top decile Workplaces
Slide 25: 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 ▪ Selected as India’s most Trusted Brand 202
Slide 26: Section III: Business Strategy
SECTION III Max Life Insurance: Business Strategy
Slide 27: Max Life will continue to focus on its 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 28: 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 Bn 23.0 1% 1% 0% 0% 1% 16.1 12.8 14.0 8.9 62% 68%
Slide 29: Agency: Strategic focus on enabling top agents and 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 30: 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 31: 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 32: Bancassurance partners continue to contribute strongly
A Bancassurance partners continue to contribute strongly Banca channels have grown at CAGR of 11% Axis Bank: Axis bank grew by CAGR of 12% over last five years Amount in INR Bn Amount in INR Bn 35.7 34.7 31.2 23.7 19.3 39.5 38.7 35.3 28.4 FY'18 FY'20 FY'21 FY'22 FY'23 Branches (#) 3,703 4,351 4,666
Slide 33: 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 Max Life Insurance 33
Slide 34: 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 Annuity NP
Slide 35: Max Life at the forefront of Products Innovation
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 36: Product suite at affordable premiums for all customer segments
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 agenda through experiments
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 38: 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 APE*- Tripled over a 5 year period Amount in INR Bn 3x ▪ Underwriting:
Slide 39: 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 40: Robust risk management measures to hedge 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 41: 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 & Insta Claim™ Dial Partner for Life now,
Slide 42: Significant progress on our Digital Journey
D Significant progress on our Digital Journey 50+ 72.8% Partners Automated Underwriting (Retail) Text 56% ~58 DIGITAL NATIVE FRICTIONLESS Infra on Cloud Claims paid everyday TALENT CUSTOMER ONBOARDING 44% <3 seconds 6L^ Insta COI (Axis) Page load time DIGITAL Text DIGITAL SALES Policies SELF-SERVE T
Slide 43: Max Life's 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 44: Leader 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 45: Digitizing the sales force by driving capability and productivity
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 46: Integration with Axis Bank marketplace and partner ecosystem
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 47: Leveraging ecosystems built on the India Stack
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 48: 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 49: 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 50: 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 51: 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 51
Slide 52: Max Life's 5-Year Aspirations
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 53: Section IV: ESG
> SECTION IV > ESG a
Slide 54: Four pillars of our sustainability framework
Four pillars of our sustainability framework Investors Communities Regulators ESG Distribution Partners Customers Employees Max Life Insurance 54
Slide 55: 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 56: 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 57: 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 58: 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 59: 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 60: Accomplishments in our key strategic shifts in 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 61: Annexures
> a ANNEXURES a
Slide 62: 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 Max Life Insurance 62
Slide 63: Sensitivity analysis as at 31st March 2023
Sensitivity analysis as at 31st March 2023 EV New business Sensitivity Value (Rs Bn) % change VNB (Rs Bn) | NBM % change Base Case 162.6 - 19.5 | 31.2% - Lapse/Surrender - 10% increase 162.8 0.1% 19.5 | 31.2% 0.1% Lapse/Surrender - 10% decrease 162.3 (0.2%) 19.4 | 31.1% (0.4%) Mortality - 10% increa
Slide 64: 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 65: 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 66: 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 67: 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 68: 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
Slide 69: Thank You
Thank You *GPTW ranking as of 2021, company has not participated post 2021
Max Financial Services — Investor Presentation (June 2023) on 6ix