Max Financial Services Limited · NSE:MFSL
Max Financial Services — 9M FY2019 Earnings Presentation
40 slides from Max Financial Services's earnings presentation, Feb 11, 2019
Slide 1: Max Financial Services Investor Release - 9M'FY19
Max Financial Services Investor Release- 9M’FY 19 February 2019 Disclaimer This release is a compilation of financial and other information all of which has not been subjected to audit and is not a statutory release. This may also contain statements that are forward looking. These statements are bas
Slide 2: Max Financial Services: 9MFY19 Key Highlights
Max Financial Services : 9MFY19 Key Highlights Group Revenue* at Rs 11,292 Cr, grows 16% y-o-y. Group PBT at Rs 253 Cr, down 27% y- 1 o-y, due to one off expenses relating to acquisition, expenses related to distribution expansion and change in product mix 2 MCEV as at 31st Dec 2018 at Rs. 8,254 Cr;
Slide 3: Agenda
Agenda 1 Industry Overview 2 Max Life Overview 3 EV Disclosures 4 Financial Performance 5 Awards and Accolades Investor Release 3
Slide 4: 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
Slide 5: Industry Landscape (9M FY'19): Max Life recorded strong growth
Industry Landscape (9M FY’19): Max Life recorded strong growth (+20%) as compared to Industry growth (+8%) and Private growth (11%) YoY Growth basis Individual Adjusted FYP FY’17 FY’18 9M’ FY18 9M’ FY19 Private Industry YoY growth 26% 24% 33% 11% Industry Max Life 25% 25% 25% 21% 20% 19% 18% 8% 65 b
Slide 6: Agenda
Agenda 1 Industry and Economic Overview 2 Max Life Overview 3 EV Disclosures 4 Financial Performance 5 Awards and Accolades Investor Release 6
Slide 7: 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
Slide 8: Financial Performance Summary 9M' FY19
1 Financial Performance Summary 9M’ FY19 Pvt Market Share Individual APE Gross Written Premium AUM 21% 9% 65 bps Rs 2,269 Cr Rs 9,054 Cr 15% Rs 58,397 Cr 16% [8%] [Rs 1,872 Cr] [Rs 7,852 Cr] [Rs 50,333 Cr] Profit Before tax Net Worth Policyholder Cost to Policyholder Expense GWP Ratio to GWP Ratio R
Slide 9: 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% 41% 37% 40% 9% 3% 4% 7% 8% 6% 8% 4% 4% 9% 5% 8% 4% 12% 4% 6% 54% 43% 46% 42% FY 17 FY 18 9M' FY 18 9M' FY 19 Product mix basis total APE (in
Slide 10: Focus on Protection
Focus on Protection 1 76% increase in individual protection APE and 57% increase in individual protection policies, 29% of total individual policies are protection Figures in Rs. Cr. Figures in ‘000. Total APE (Individual + Group) No of Protection Policies (Individual) 282 256 131 189 120 171 93 85
Slide 11: Focus on Protection: growth led by proprietary channels
1 Focus on Protection Protection growth led by proprietary channels Total Protection APE % Individual protection penetration within Channels Proprietary 12% 15% 11% 12% 9% 10% 5% 8% 7% FY 17 FY18 9M' FY 18 9M' FY 19 4% 4% 3% 2% Banca & others 1% 1% 1% 5% 3% 3% 3% 3% FY 17 FY18 9M' FY 18 9M' FY 19 2%
Slide 12: 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 23 10 ULIP 37 14 10 Whole Life 36 64 51 Money back 28 17 16 Pure Term 35 34 33 GMIP/GIP 43 19 9 Health 39 17 17 Cancer Insurance 3
Slide 13: Superior customer outcomes and retention across quality parameters
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 24% 90% 90% 89% 89% 21% 20% 20% FY17 FY18 9M' FY 18 9M' FY 19 FY17 FY18 9M' FY 18 9M' FY 19 Continuo
Slide 14: Comprehensive multi-channel distribution with consistent contribution from proprietary channels
Comprehensive multi-channel distribution with consistent 2 contribution from proprietary channels , investment in proprietary aiding growth Proprietary Axis Bank Other Banks Others 1% 1% 1% 1% 12% 13% 13% 11% 26% 17% 58% 56% 55% 59% 30% 17% 29% 27% 31% 33% FY 17 FY18 9M' FY18 9M' FY19 Investment in
Slide 15: 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
Slide 16: 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) 92.4 26.9 27.9 83.9 79.5 24.4 23.2 69.3 FY17
Slide 17: Using digital technologies for efficient sales and better customer experience
Using digital technologies to harness data and analytics for more 3 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
Slide 18: Digital Penetration Growing Rapidly Across All Customer touch points
Digital Penetration Growing Rapidly Across All Customer touch 3 points (YTD Dec’18) Key Business Lever Performance Update 1 Online Sales through Website 134% YoY Growth in New Business YoY growth in customer traffic 2 Digital Traffic on Website 15% 63% on company’s website 3 Online Customer Service
Slide 19: Life Insurance business management retooled across the enterprise
3 Life Insurance business management retooled across the enterprise Prospecting & Solution Fulfillment Servicing Generation 14K+ Sellers continue using the lead 95% 40% generation tool every month (11k of all policies applied through of all active user base are using last year) automated tool (vs. 8
Slide 20: Partners to enable a seamless, best-in-class customer experience
Leveraging the latest technologies and integrations with ecosystem 3 partners to enable a seamless, best-in-class customer experience across the entire customer life cycle. Customer Claims and Seller On-boarding Underwriting Policy Fulfillment Servicing Renewal onboarding Maturity • Mobile based • M
Slide 21: Agenda
Agenda 1 Industry and Economic Overview 2 Max Life Overview 3 EV Disclosures 4 Financial Performance 5 Awards and Accolades Investor Release 21
Slide 22: Key Results
Key Results The Embedded Value1 (EV) as at 31st Dec 2018 is Rs 8,2542 Cr. The annualized Operating Return on EV (RoEV) 3 over 9M FY19 is circa 18.8%. The New Business Margin (NBM) over 9M FY19 is 22.8% (before allowing for operating cost overrun) and 20.4% (post overrun). The Value of New Business (
Slide 23: Overview of the components of the EV as at 31st December 2018
Overview of the components of the EV as at 31st December 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 2,456 Cr TVFOG Rs 36 Cr CRNHR Present Rs 750
Slide 24: Value of New Business and New Business Margins as at 31st December 2018
Value of New Business and New Business Margins as at 31st December 2018 Description 9M FY18 9M FY19 Y-o-Y growth APE 1 1,893 2,291 21% New Business Margin (NBM) 20.0% 22.8% +280 bps (before cost overrun) New Business Margin (NBM) 18.0% 20.4% +240 bps (post cost overrun) Value of New Business (VNB) 3
Slide 25: Sensitivity analysis as at 30th September 2018
Sensitivity analysis as at 30th September 2018 EV New business Sensitivity EV VNB Sensitivity Value (Rs Cr) % change VNB (Rs Cr) | NBM % change Value (Rs Cr) % change Value (Rs Cr) % change Base Case (before final SH dividends) 8,034 - 290 | 20.4% - Base Case 7,142 - 204 - Lapse/Surrender - 10% incr
Slide 26: Agenda
Agenda 1 Industry and Economic Overview 2 Max Life Overview 3 EV Disclosures 4 Financial Performance 5 Awards and Accolades Investor Release 26
Slide 27: Delivering consistent growth in top line and renewals coupled with cost efficiencies
Delivering consistent growth in top line and renewals coupled with driving cost efficiencies Financial Performance FY 17 FY18 9M FY18 9M FY19 22% 3,248 21% 2,657 2,269 Individual APE 1,872 15% 14% 7,114 8,152 5,214 5,956 Renewal Premium 16% 12,501 15% 9,054 10,780 7,852 Gross Premium Policyholder ex
Slide 28: Healthy and consistent profitability while maintaining solvency above required levels
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 9M FY18 9M FY19 20% 4% Profit(before Tax) 768 615 390 375 18% 16% 44,370 52,237 50,333 58,397 AUM 140 bps 240 bps New Busin
Slide 29: Assets under management - Y-o-Y growth at 16%
Assets under management- Y-o-Y growth at 16% 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% Investor Release 29
Slide 30: Performance update - Q3'FY19 and 9M'FY19
Performance update- Q3’FY19 and 9M’FY19 Quarter Ended Q-o-Q 9M Ended Y-o-Y Key Business Drivers Unit Dec'17 Dec'18 Growth Dec'17 Dec'18 Growth a) Individual adjusted premium Rs. Crore 764 866 13% 1,876 2,245 20% b) Gross written premium income Rs. Crore 3,044 3,435 13% 7,852 9,054 15% First year pre
Slide 31: Agenda
Agenda 1 Industry and Economic Overview 2 Max Life Overview 3 EV Disclosures 4 Financial Performance 5 Awards and Accolades Investor Release 31
Slide 32: Awards and Accolades
Awards and Accolades 1 Setting higher benchmark with every award ▪ Ranked 43rd 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 Responsibil
Slide 33: Disclaimer
Disclaimer ▪ This presentation has been prepared by Max Financial Services Ltd. (the “Company”). No representation or warranty, express or implied, is made and no reliance should be placed on the accuracy, fairness or completeness of the information presented or contained in the presentation. The pa
Slide 34: Annexure
Annexure Investor Release 34
Slide 35: 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. 1 ▪ For the market consistent methodo
Slide 36: 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 37: 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 1,000 stochastic scenarios provided by Moody's Analytics. ▪ Given that the shareholder payout is likely to be symmetrical for guar
Slide 38: 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 FBIL 1 as at 31st Dec 2018. The VNB is calculated using the beginning of respective quarter’s risk free yield curve (i.e. 31 st March 2018, 30th Jun
Slide 39: 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
Slide 40: Thank you
INSURANCE Thank you
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