Max Financial Services Reports 235% Growth in Q1 FY21 PAT, Backed by Subsidiary Max Life’s Strong Performance


Consolidated Revenues1 at Rs. 5,517 Cr. in Q1 FY21, grew 40%, Consolidated PAT1 at Rs. 182 Cr., grew 235% Max Life Results Highlights (Q1 FY21): Individual APE: Rs. 660 Cr., gained market share by 217 bps to 11% Value of New Business stood at Rs. 113 Cr., New Business Margin was 17% Assets Under Management: Rs. 73,239 Cr.; grew 15% Embedded Value at Rs. 10,670 Cr., Operating RoEV 16% Max Financial Services Ltd. (MFSL) today announced its financial results for the quarter ended June 30th, 2020. In Q1 FY21, MFSL’s consolidated Profit after Tax grew 235% to Rs. 182 Cr. backed by strong performance of its life insurance subsidiary Max Life Insurance. Consolidated revenues were at Rs. 5,517 Cr., growing 40% year-on-year. Max Life reported Shareholders’ Profit after Tax of Rs. 171 Cr., growing 151% over the previous year. The growth in profits was aided by higher investment income, lower claims, and tax refunds. Max Life’s total revenues2 of Rs. 3,616 Cr. grew 2% in Q1 FY21. Despite an impact on new sales due to COVID-19 towards the end of FY2020, Max Life picked up momentum in Q1 FY21 and gained market share by 217 bps to 11%. Max Life ranked fourth amongst all private life insurers. The individual protection penetration saw a 103% increase in the first quarter, indicating that every second policy sold was a protection policy. In the same period, Individual New Business sum assured grew by 39%. Max Life’s Individual APE was recorded at Rs. 660 Cr. in Q1 FY21 despite headwinds due to COVID-19. This was driven by a growth of 8% in proprietary channels, 5% in agency channels, and 31% in e-commerce. This reflects the industry outperformance in Individual APE. Private players de-grew by 23% whereas Max Life de-grew by only 4%. Max Life reported a Market-Consistent Embedded Value (MCEV) of Rs. 10,670 Cr., with an Operating Return on Embedded Value (RoEV) of 16%. The Value of New Business (VNB) written during Q1 FY21 was Rs. 113 Cr., while New Business Margin stood at 17%. In this period, Max Life’s Assets under Management (AUM) stood at Rs. 73,239 Cr., growing 15% year-on-year. Max Life was also named as the only Insurer (Life, General or Health) in the ‘Top 100 Best Companies to Work For’ survey for India conducted jointly by the Great Place to Work (GPTW) Institute and the Economic Times. Max Life was the 24th best employer overall, progressing 11 ranks from its last year’s position. The recognition marked the fourth consecutive year of Max Life’s representation being ranked one of top 50 companies in GPTW’s best workplaces league table. Mr. Mohit Talwar, Vice Chairman, Max Group & Managing Director, Max Financial Services, said, “Max Life has rebounded commendably, outpacing the competition with its growth. This has been possible due to the emphasis on strengthening digital channels, which has allowed Max Life to function remotely almost entirely from sales to customer on-boarding, and after-sales. The company has successfully invested in product innovations to capture emerging opportunities by creating a balanced product mix of traditional savings cum protection plans, unit linked plans, and pure protection products.” “We are currently in the process of coordinating regulatory approvals for the Max Life-Axis Bank JV that we announced in April 2020. The proposed JV will set Max Life up well for its next stage of growth,” he added. Note to the Editor The EV of a life insurance company comprises two key elements – a) Net Asset Value or the Net Worth of the company, which represents the market value of the company’s assets attributable to the shareholders, and b) the Present Value of the company’s future expected profits from its existing business portfolio as at the date of valuation. Max Life had transitioned its EV calculation to a Market Consistent methodology from the earlier traditional approach (Traditional Embedded Value – TEV) in FY2015. This follows the market practice in developed markets, where life insurers have moved to adopt market consistent methodologies. A market consistent methodology approach better reflects the embedded value of an insurance company by explicitly and specifically allowing for insurance and economic risks rather than using an implicit overall allowance for risks through a Risk Discount Rate (RDR) in the traditional approach. In addition, the market-consistent approach is more objective where asset and liability cash flows are valued using assumptions consistent with those applied to similar cash flows in the capital markets, thus more accurately reflecting the health of the business. Max Financial Services Limited: Max Financial Services Limited (MFSL) is part of the leading business conglomerate – the Max Group. Focused on Life Insurance, MSFL owns and actively manages a 72.52% stake in Max Life Insurance, India’s largest non-bank, private life insurance company. MFSL earned a revenue of Rs. 18,242 crore in FY2020. The Company is listed on the NSE and BSE. Besides a 28.3% holding by Analjit Singh sponsor family, some other shareholders include KKR, New York Life, Baron, Vanguard, Aberdeen, First Voyager, Jupiter and the Asset Management Companies of Reliance, HDFC, ICICI Prudential, Motilal Oswal, Aditya Birla Sun Life, Mirae, and Kotak. In April 2020, MFSL announced its intent to bring in India’s third largest private bank, Axis Bank as a JV partner for its life insurance business Max Life. Max Life Insurance Company Launched in 2000, Max Life is India’s largest non-bank private life insurer and the fourth largest private life insurance company. In April 2020, Max Life announced a strategic deal with India’s third largest bank – Axis Bank to become a 70:30 JV partner in the life insurance company. [1] Consolidated numbers have been reported basis IndAS [2] Max Life numbers are reported on IGAAP basis and Revenue excludes Unit linked Investment Income.


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