Chairman & MD’s Letter

Max Life plans to achieve its target of 25% New Business Margin, Return on Embedded Value and 25% growth in Value of New Business through a well-defined strategy encompassing digitisation, a superior customer service experience, reinvigoration of its proprietary channels and an increased focus on protection products.

Dear Shareholders,

As you may recall, last year we had outlined a renewed growth plan for Max Financial Services Limited’s (MFSL) sole operating subsidiary Max Life Insurance Company (Max Life). We shared with you Max Life's ambitious plans for its proprietary channels to nearly double its offices and rapidly increase its agency force while continuing to develop its digital and direct sales channels.

It gives me immense satisfaction to report that the Company has successfully executed its growth initiatives and has also grown faster than the life insurance sector. For MFS, FY2019 has been synonymous with meeting and exceeding expectations and achieving new success milestones.

Max Life’s performance was a combination of stellar effort by its team, along with a secular uptick in the Indian life insurance sector - a phase that started immediately after demonetisation and led to savings shifting from physical assets to financial assets. This high point of India's life insurance industry has proved to be immensely beneficial for Max Life, which outpaced the industry with a growth of 21%. Max Life now commands nearly 9.7% of the private life insurance market share.

Driven by Max Life’s financial performance, MFS reported consolidated revenues of ` 19,501 crore, showcasing a growth of 19% over the previous year. Its consolidated Profit After Tax however was 6% lower than last year at ` 416 crore largely due to one-time expenses for pursuing an inorganic opportunity for Max Life and the impact of adopting the accounting methodology IndAS in FY2019.

Max Life’s success has been anchored by robust performance traversing multiple business metrics. The Company demonstrated growth across channels with Gross Written Premium of ` 14,575 crore, growing 17% over the previous year. New Business Premium stood at ` 5,160 crore, achieving a growth of 19% over the previous year. It also reported Market-consistent Embedded Value (MCEV) of ` 8,938 crore, with an Operating Return on EV (RoEV) of 22%. The Value of New Business (VNB) written during FY2019 was ` 856 crore, growing 30% over the previous year, and the New Business Margin (NBM) stood at 22%, 150 bps higher compared to the previous year. Max Life has also set a benchmark as a leader among industry peers with a Claims Paid Ratio of 98.7%, an improvement of 48 bps from last year.

The resolute focus on proprietary channels led to a robust 29% growth in new business from them. Digital and direct online sales, in particular, now account for nearly 15% of Max Life’s customers for the year.

The focus on proprietary channels did not however come at the cost of bancassurance, which also witnessed a strong 18% growth on a relatively large base. Its bancassurance relationship with Axis Bank continues to be one of the fastest growing partnerships in the Indian life insurance industry. Despite an open architecture set up at Axis Bank, Max Life continued to garner strong business volume at the bank in both individual and group categories. To enhance value creation for all its stakeholders, Max Life is actively exploring longer term partnership options that can further solidify its partnership with Axis Bank. At the same time, Yes Bank’s exclusive relationship with Max Life also continued to gain scale, driven by growth of 34% in new business.

Great Place to Work Institute, in its annual listing in 2019, has ranked Max Life Insurance as the only life insurer among India's 'Top 100 Great Places to Work For'. This is a strong validation of the Company’s talented and highly motivated team and a great work culture.

After exhibiting consistent financial growth across various parameters of business health and a steadfast commitment to securing the financial future of its customers, Max Life now has a clear focus to achieve its 25-25-25 vision by FY2022. In simple terms, the Company is targeting 25% New Business Margin, Return on Embedded Value and 25% growth in Value of New Business. This will be accomplished through a well-defined strategy encompassing digitisation, a superior customer service experience, reinvigoration of its proprietary channels and an increased focus on protection products. The Company will continue to leverage smart technologies to ease the policy issuance journey for the customer and will deploy Artificial Intelligence (AI) in its customer service processes.

We are confident that Max Life will be able to achieve these milestones especially against the backdrop of a promising future for the Indian life insurance industry. The sector has the potential to grow at an impressive pace of 12% to 15% in the coming 2 - 3 years, primarily powered by a wave of confidence in financial savings and investments, a healthy demand for protection and long-term saving products as well as increased awareness around the importance of financial planning.

It is our firm belief that given Max Life’s top quartile position in the sector and a well-articulated strategy backed by strong execution muscle, we will achieve the new growth milestone mentioned earlier, in record time. This achievement will reap immense benefits for you, our shareholders. We look forward to your continuous support and belief in the Company’s vision and thank each and every one of you for bestowing your faith in all our endeavours.

With Best Wishes and Worm Regards,

Analjit Singh

Founder & Chairman

Mohit Talwar

Managing Director