Max Financial Services Limited Investor Presentation August 2017 - - PowerPoint PPT Presentation

Max Financial Services Limited Investor Presentation August 2017

2

Max Group Vision “To be the most admired corporate for service excellence”

Health Insurance, JV with Bupa Plc Health Insurance, JV with Bupa Plc

3

Evolution of Max Group—Strong history of entrepreneurship and nurturing successful businesses

1985 1993 2000

Forays into Penicillin bulk pharma Forays into Penicillin bulk pharma Enters Telecom in JV with Hutchison JV with Gist Brocades (Asia’s largest Drug manufacturer ) Enters Telecom in JV with Hutchison JV with Gist Brocades (Asia’s largest Drug manufacturer ) Shift from B2B to B2C businesses:

• Life insurance
• Healthcare
• Clinical research

Shift from B2B to B2C businesses:

• Life insurance
• Healthcare
• Clinical research

Hutchison

Fund raising ~ USD 360 Mn

• QIP- USD 156 Mn in 2007
• Warburg Pincus - 53 Mn in 2005
• IFC- 47 Mn(2007) &23 Mn (2009)
• Goldman Sachs 82 Mn in 2011

Fund raising ~ USD 360 Mn

• QIP- USD 156 Mn in 2007
• Warburg Pincus - 53 Mn in 2005
• IFC- 47 Mn(2007) &23 Mn (2009)
• Goldman Sachs 82 Mn in 2011

2005 2011 2007 2009 2012 2013 2014 2015 2016

NYL exits and JV with MSI in 2012

• MSI is world’s 7th largest

general insurance group

• MSI acquired 26% stake for

USD 425 Mn

• Max Life valued at USD 1.6

bn

NYL exits and JV with MSI in 2012

• MSI is world’s 7th largest

general insurance group

• MSI acquired 26% stake for

USD 425 Mn

• Max Life valued at USD 1.6

bn

LHC inducted as JV Partner in MHC

• LHC is 2nd largest hospital

chain in South Africa

• 2012 - Acquired 26% stake

for USD 81 Mn in MHC

• 2014 - Equalize stake in

MHC invests USD 120 Mn

LHC inducted as JV Partner in MHC

• LHC is 2nd largest hospital

chain in South Africa

• 2012 - Acquired 26% stake

for USD 81 Mn in MHC

• 2014 - Equalize stake in

MHC invests USD 120 Mn

Enter Senior Living business, launch first community in Dehradun with 200 units Enter Senior Living business, launch first community in Dehradun with 200 units Max India demerged into 3 listed hold cos Max India demerged into 3 listed hold cos Landmark Acquisitions by MHC

• Acquired 79% stake for

USD 40 Mn in 340 bedded Pushpanjali hospital expandable upto 540 beds

• Acquired 51% stake for

USD 100 Mn in 230 bedded Saket City hospital, expandable upto 1200 beds

Landmark Acquisitions by MHC

• Acquired 79% stake for

USD 40 Mn in 340 bedded Pushpanjali hospital expandable upto 540 beds

• Acquired 51% stake for

USD 100 Mn in 230 bedded Saket City hospital, expandable upto 1200 beds Note: USD rate considered at 64

4

Max Group – Corporate Structure

Promoter holdings in Max Group holding companies

5

Max Group Overview

USD 2.6 billion+ Revenues… 9 Mn Customers… 23,000 Employees… ~65,000 Agents Strong growth trajectory even in challenging times; a resilient & diversified business model Steady revenue growth and cost rationalization leads to strong financial performance Well established board governance….internationally acclaimed domain experts inducted Diversified ownership…..marquee investor base Superior brand recall with a proven track record of service excellence Strong history of entrepreneurship and nurturing successful business partnerships

1 2 3 4 5 6 7

6

Max Group : Continues to grow from strength to strength

Group EBITDA (USD Mn)

69 82 97 112 160 FY'13 FY'14 FY'15 FY'16 FY'17

Group Revenue (USD Mn)

1,465 1,664 1,944 2,225 2,625 FY'13 FY'14 FY'15 FY'16 FY'17

Note: Adjusted for one‐offs

7 Promoter 30.4% Goldman Sachs 5.0% KKR 10.0% Mutual Funds 21.8% FII‐ Others 18.9% Public 14.0%

Shareholding Pattern as on 30th Jun 17

• KKR
• Goldman Sachs
• Vanguard
• Wasatch
• Morgan Stanley
• Baron Emerging Market Fund
• Reliance Mutual Fund
• Motilal Oswal Mutual Fund
• ICICI Prudential Mutual Fund
• Birla Sunlife Mutual Fund
• Kotak Mutual Fund
• DSP Blackrock Mutual Fund

Shareholding concentrated with Marquee Investors

High pedigree of long term investor base

Number of outstanding shares : 26.73 Cr.

Max Life Insurance Company Limited

9

Indian Life Insurance Industry has evolved rapidly; significant headroom still available for growth due to low penetration and favourable demographic profile

1

Strong parentage, marquee investors, eminent Board, strong management team and robust governance framework

2

Differentiated Life Insurer with key strengths of multi‐channel distribution, balanced product mix, operational excellence and digital capabilities

3

One of the fastest growing players with equal emphasis on profitability – Among the top quartile across the comprehensive measures of success

4

With US 1 Bn+ of MCEV as at 31st March 2017, operating RoEV of 20% and new business margin at 18.8% are amongst the best in the industry

5

Key Summary Messages

Strength in business model recognised through several Awards and Accolades that Max Life Insurance wins every year

6

0% 2% 6% 15% 25% 34% 36% 50% 57% 52% 46% 37% 38% 38% 49% 52% 10 12 12 13 16 21 40 53 47 55 50 48 47 45 41 44 53 10

FY02 FY01 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY14 FY13

Phase 1

Joyful Entry (2001‐2003)

Phase 2

Expansion (2004‐2008)

Phase 3

Discovering New Normal (2009 onwards)

• Ind. Adj. FYP (First Year Premium)

(In Rs 000 Cr)

FY15

Source: IRDAI and Life Council for FY 16‐17

FY16

Private market share in terms of Ind. Adj. FYP

Private players count

Overview of Life insurance industry in India

11 12 12 13 14 15 17 21 22 22 23 23 23 23 23 4

92% 31% ‐10% 17% ‐8% ‐5% ‐2% ‐3% ‐10% 8% 100% 86% 1% 7% ‐20% ‐24% 2% ‐3% 16% 14%

Growth: Private Growth: Industry

13% 17% 34%

>100% >100%

81% 2%

>100%

19%

>100%

‐3%

FY17

21% 26%

23

Investor Release 11

Industry Landscape (Q1 FY’18): Industry grew by 29% driven by strong

performance of the private players (+45%) and LIC (+13%)

Source: Life Insurance Council | IRDAI

YoY growth Individual Adjusted FYP

8% 21% 16% 29% 8% 25% 22% 19%

Industry Max Life

Max Life’s private market share

FY’16 FY’17 Q1 FY’17 Q1 FY’18 9% 9% 10% 8%

Private Industry YoY growth

26% 45% 14% 21%

Significant proportion of the private industry’s growth was driven by higher UL mix and low base effect owing to relatively subdued performance in Q1 FY17

Investor Release 12

% of Life Insurance in household savings‐ India

Significant potential to expand both in savings and protection segment

Life Insurance Penetration (Premium as % of GDP), 2016

2.3% 2.7% 7.4% 7.2% 16.2% 16.7% China India South Korea Japan Hong Kong Taiwan

Level of Protection (Sum Assured as % of GDP), 2015

226% 260% 149% 60% 96% Singapore Japan Malaysia India Thailand

Life Insurance Density (Premium per capita – USD), 2016

47 190 2,803 3,599 7,066 India China Japan Taiwan Hong Kong 21.0% 17.0% 16.0% 19.0% 19.0% FY'12 FY'13 FY'14 FY'15 FY'16

Source: "Swiss Re: World Insurance in 2016"

Highly experienced and versatile Board of Directors providing strong and secure foundation

Founder and Chairman Emeritus

• Mr. Analjit Singh

Chairman

• Mr. Rahul Khosla

Director

• Mr. John Poole

Director

• Mr. Masataka

Kitagawa Independent Director

• Mr. Rajesh Khanna

Independent Director

• Mr. K. Narasimha

Murthy Independent Director

• Mr. D. K. Mittal

Director

• Ms. Marielle Theron

Director

• Mr. Hideaki Nomura
• Exec. Vice Chairman

and MD

• Mr. Rajesh Sud

Fellow of the Institute and Faculty of Actuaries. Served as the AA for Max Life from 2005 till 2011 Fellow of the Institute and Faculty of Actuaries. Served as the AA for Max Life from 2005 till 2011 Founder and CEO of Arka Capital Advisors. Previously served as MD and India Head at Warburg Pincus Founder and CEO of Arka Capital Advisors. Previously served as MD and India Head at Warburg Pincus Responsible for Mitsui Sumitomo overseas life insurance business with 30 years of experience Responsible for Mitsui Sumitomo overseas life insurance business with 30 years of experience A founder team member. Appointed as CEO and Managing Director in November 2008 A founder team member. Appointed as CEO and Managing Director in November 2008 Founder and Chairman of Max

• India. Awarded with highest

civilian honor, the Padma Bhushan Founder and Chairman of Max

• India. Awarded with highest

civilian honor, the Padma Bhushan Seasoned business manager with wide domain expertise built over 27 years in financial services Seasoned business manager with wide domain expertise built over 27 years in financial services Fellow of the Society of Actuary (FSA). She is a Principal of Erlen Street Corporation, Switzerland Fellow of the Society of Actuary (FSA). She is a Principal of Erlen Street Corporation, Switzerland Serving on the Board of ONGC, LIC Housing, STCI, Infiniti Retail, APSFC, Max Bupa and NABARD Serving on the Board of ONGC, LIC Housing, STCI, Infiniti Retail, APSFC, Max Bupa and NABARD Former IAS officer of 1977 batch and has served the government of India in various capacities Former IAS officer of 1977 batch and has served the government of India in various capacities Seasoned professional with 29 years experience in financial industries Seasoned professional with 29 years experience in financial industries Director

• Mr. Mohit Talwar

Seasoned professional with 24 years of experience in Corporate Finance and Investment Banking Seasoned professional with 24 years of experience in Corporate Finance and Investment Banking

13

Executive Management team with rich experience of insurance and strong Governance Mechanism

Max Life Management Team

Executive Vice Chairman and MD Rajesh Sud (16 years)

Sr Director and Chief Operating Officer (16 years) V Viswanand Director and Chief People Officer (5 years) Shailesh Singh

• Total Experience:

26 years

• Previous

Organizations: GE, SRF Finance, Eicher Tractors

Director Marketing & Chief Digital Officer (12 years) Manik Nangia Director & Chief Distribution Officer (4 years) Aalok Bhan

• Total Experience:

25 years

• Previous

Organizations: Standard Chartered Bank, ABN AMRO, RBS

Director and Appointed Actuary (8 years) Jose John

• Total Experience:

17 years

• Previous

Organizations: Prudential UK Metlife UK

Director and Head ‐ Legal , Compliance and Regulatory Affairs (3 years) Amitabh Lal Das Sr Director and Chief Financial Officer (10 years) Prashant Tripathy

• Total Experience:

22 years

• Previous

Organizations: Tata Steel, GE

Director and Chief Investment Officer (3 years) Mihir Vora

• Total Experience:

21 years

• Previous

Organizations: HSBC Global Asset Management, ICICI Prudential, Birla Sun Life AMC

• Total Experience:

23 years

• Previous

Organizations: ANZ Grindlays Bank

• Total Experience:

17 years

• Previous

Organizations: ABN AMRO, ICICI Bank, ICICI Prudential

• Total Experience:

21 years

• Previous

Organizations: Yahoo, Sapient

• Total Experience: 24 years
• Previous Organizations:

Bank of America, ABN AMRO , ANZ Grindlays

Tenure at Max Life

Quarterly Board Meeting Board Sub Committees

Executive Vice Chairman and MD Executive Mgmt. Committee

Weekly EMC Meeting Monthly Senior Leadership Meeting Monthly Business Reviews Weekly Team / Functional Meetings Council Meetings Cross Functional Connects

Governance Mechanism

Central PMO to drive Strategic Projects 14 Shareholders Meeting twice a year at neutral locations

Shareholder

Monthly Shareholder Calls

Board

Shareholders Meeting interspersed with Board Meetings

To be the most admired life insurance company by securing the financial future

• f our customers

FY 2020‐21

• Touch 1 crore lives
• Two fold increase in GWP & statutory profits

Caring Credibility Collaborative Excellence

• We are an honest life insurance company, committed to doing what

is right

• We serve our customers through Long term savings, protection and

retirement solutions, delivered by our high quality Agency & Multi channel Distribution Partners

• We are a business with strong social relevance and contribute to Society

by supporting causes in health and wellbeing. Financial Strength Quality of Advice Service Excellence Superior Human Capital Value Driven Culture Corporate Governance

Vision Goals We Stand for Values Integrity Mission

15

Long Term strategy is driven by our vision to be the “Most Admired Life Insurance Company”

» Quality of advice » Human Capital and Leadership depth » Differentiated distribution capabilities » Product suite focused on “Long Term Savings and Protection » Quality of Business » Strong & Distinctive Brand

What are we known for

16

Our Strategy: Strengthen multi‐channel architecture and leverage technology to continue profitable growth

• Superior financial performance with profitable growth
• Balanced product mix with focus on long term saving and protection proposition
• Superior customer outcomes and retention

Continue to chase profitable growth Continue to chase profitable growth

• Comprehensive multi‐channel distribution model with highly efficient and productive

agency channel and strong Banca relationships

• Proprietary channel of the future will work towards driving efficiencies of existing assets

and variablizing costs by leveraging technology

• Using digital technologies to harness data and analytics for more efficient sales

processes and better customer experience

• Digitization of backend infrastructure for driving operational efficiencies

Strong digital footprints Strong digital footprints

Investor Release

Comprehensive multi‐channel distribution model Comprehensive multi‐channel distribution model

Supported by eminent Board, strong management team and robust governance framework

1 2 3

Private Market Share 9% [9%] Individual Sales Rs 2,639 Cr [Rs 2,103 Cr] Gross Written Premium Rs 10,780 Cr [Rs 9,216 Cr] AUM Rs 44,370 Cr [Rs 35,824Cr] Profit Before tax Rs 592*Cr [Rs 511 Cr] Net Worth Rs 2,509 Cr [Rs 2,024 Cr] Embedded Value* 6,739 [5,617] Policyholder Expense Ratio 13.4%^ [13.6%] Sum Assured 3,77,572 Cr [2,71,633 Cr] Policies in force (Individual in Lakhs) 39.12 [37.60] Solvency Ratio 309% [343%] Case Size 51,056 [44,566]

• No. of Employees

9,446 [9,259]

• No. of Agents

54,283 [45,275] Claim Settlement Ratio 97.1% [96.9%] Protection Mix 4% [3%]

17

25% 24% 4% 20 bps 2% 39%

• Abs. 34%

15% 20%

Financial Performance Summary: FY’17

16% 24% 17% 20 bps

1

60 bps

Figures in [brackets] are for previous year numbers (FY16) ; *Growth on Embedded value is operating RoEV;^ Excludes impact of One‐off expense & Merger costs

20%

*FY17 numbers are adjusted for non‐repeatable items and one‐time non operating gains realization primarily from investment income

Figures in [brackets] are for previous quarter numbers; ^ Represents comparison from March’17 numbers

Total Revenue 2,560 [2,234] Individual Sales Rs 458 Cr [Rs 384 Cr] GWP Rs 2,007 Cr [Rs 1,746 Cr] AUM^ Rs 45,870 Cr [Rs 44,370 Cr) Profit Before tax Rs 106 Cr [Rs 106 Cr*] Net Worth^ Rs 2,452 Cr [Rs 2,509 Cr] Share Capital^ 1919 [1919] Cost to GWP Ratio 26.5% [26.7%] Sum Assured 3,90,017 Cr [3,27,172 Cr] Policies in force (Individual in lakhs) 39.06 [37.42] Solvency Ratio^ 295% [309%] Case Size 45,965 [42,787]

• No. of Employees

9,430 [9,010]

• No. of Agents

53,120 [48,611] Claim Settlement Ratio 94.66% [93.69%] Protection Mix 7% [4%]

18 Investor Release

15% 19% 3% 4% 24 bps 5% 19% 14% 7% 9%

Financial Performance Summary Q1’FY18

2% 15% 97 bps

1

283 bps

*Higher Q1’FY 16‐17 profit is due to one‐time non operating gains realization primarily from investment income

Investor Release 19

Delivering consistent growth in top line and renewals coupled with driving cost efficiencies

Figures in Rs. Cr

Ind Adj. FYP Renewal Premium Gross Premium FY 16 FY17

2,103 2,639

Financial Performance

6,334 7,114

Q1’FY17 Q1’FY18

384 458 1,175 1,342 9,216 10,780 1,746 2,007

25% 19% 12% 14% 17% 15%

Cost to GWP Ratio 26.7% 26.5% 23.0% 24.3%

138 bps 24 bps

FY 16 FY17 Financial Performance

Investor Release 20

Healthy and consistent profitability creating value to all the stakeholders while maintaining solvency above required levels

Figures in Rs. Cr.

AUM Profit Before Tax* Solvency Ratio 343% 309%

511 592 106

295% 347%

35,824 44,370 37,701 45,870

16% 24% 22% 34% 52%

Q1’FY17 Q1’FY18

*FY17 numbers are adjusted for non‐repeatable items and one‐time non operating gains realization primarily from investment income

106*

21 Investor Release

58% 55% 56% 54%

3% 4% 4% 7%

11% 9% 10% 8% 28% 32% 30% 31% FY 16 FY 17 Q1'FY7 Q1'FY18 PAR Non PAR‐ Protection Non PAR‐ Savings ULIP

Product mix basis Ind. AFYP

Balanced product mix with enhanced focus on long term saving and protection contribution

1

As on 30th Jun 2017

*PPT: Premium Payment Term

22 Investor Release 24 14 64 16 30 19 15 30 21 57 34 37 36 28 35 43 39 39 36 63

Product Type Average Policyholder Age (Years) Average Policy Term (Years)

Average Average

Average PPT* (Years)

Average

Endowment ULIP Whole Life Money back Pure Term GMIP/GIP Health Cancer Care Pension Annuity

11 10 54 17 29 9 15 30 21 1

35 25 16

Balanced product mix with focus on long tenor life coverage

1

Continuous improvement in persistency Continuous improvement in persistency Steady retention capabilities Steady retention capabilities High quality business franchise High quality business franchise

23 Investor Release

21% 21% 32% 32% FY16 FY17 Q1'FY17 Q1'FY18

Surrender to GWP

86% 89% 87% 92.0% FY16 FY17 Q1'FY17 Q1'FY18

Conservation Ratio

Superior customer outcomes and retention with continuous improvement across all quality parameters

43% 53% 46% 54% FY16 FY17 Q1'FY17 Q1'FY18

61st month persistency ratio

79% 80% 81% 82% FY16 FY17 Q1'FY17 Q1'FY18

13th month persistency ratio

1

2 Comprehensive multi‐channel distribution with consistent

contribution from proprietary channels

24 Investor Release

Distribution mix basis Ind. AFYP

32% 29% 38% 35% 58% 58% 50% 48% 9% 12% 10% 16% 1% 1% 1% 1% FY 16 FY 17 Q1'FY17 Q1'FY18 Proprietary Axis Bank Other Banks Others

Highly efficient and productive agency channel with focus on quality of advice Highly efficient and productive agency channel with focus on quality of advice Strong Banca relationship with consistent growth Strong Banca relationship with consistent growth

25

Active Agent productivity (Rs ‘000 pm) Branch productivity (Rs Lakhs pm)

Investor Release

22.5 24.4 19.3 19.7 FY16 FY17 Q1'FY17 Q1'FY18

• Ind. Adj. FYP (Rs. Cr)

Highly efficient and productive agency channel and strong banca relationships with consistent growth

1,387 1,814

FY16 FY17

228 288

Q1'FY17 Q1'FY18

2

46.9 69.3 66.2 81.5 FY16 FY17 Q1'FY17 Q1'FY18

4 1

Investor Release 26

3 Using digital technologies to harness data and analytics for more

efficient sales processes and better customer experience

Digital Marketing and E Commerce

• Max Life continued its dominance in Online Term market and in Q1

FY 18

• A modified term product with enhanced features and new journeys

planned for launch in Q2, designed to enhance more value per customer Re‐imagining Fulfillment

• Use of external data sources to avoid paper submission for financial

underwriting

• Predictive models to gauge insurability to provide frictionless journey
• Upto 90% reduction in policy issuance TAT being achieved with digital

proposals in Agency

• To generate new revenue line, launching ‘Axis Digital Circle’ tool to

enable on‐call sales fulfillment in Q2 Transforming Digital Interface

• A new ‘Payment First’ journey

launched with a bet to optimize sales effort; Expected to improve conversion

• Frictionless journey being built as an

experience differentiator – 14% cases processed with Zero Documents & 28 % with No Medicals

• Launching a unified seller and

customer servicing tool (mPower) in Q3 to increase agent productivity & persistency Seller Ecosystem

• Prospecting and solution generation

tool being used pan‐India for Agency by over 14,000 advisors and is enhancing Agency Performance

• Smart analytics from the data giving

lead propensity and forecasting insights to sales teams

• End to end sales process eSales

adopted 99.9% in Axis channel

• New mobile based CRM introduced

for lead management in bancaassurance channels

Areas of leverage for digital technology

Smarter Acquisition Higher Conversion Higher customer lifetime value Better risk selection & customer experience

2 3

~80% of policies are fulfilled digitally and ~55% of renewals are managed digitally; all of this leads cost efficiency and faster turnaround time

27 Note: Figures in Rs Cr.

EV movement analysis: March 2016 to March 2017

NAV 2,076 NAV 2,547 NAV 2,398 VIF 3,541 VIF 4,192 VIF 4,192 499 534 86 171 169 149 Opening EV Value of New Business Unwind Operating variance Non‐Operating Variance Dividend paid during the year Closing EV (before final dividend) Final proposed dividend Closing EV (after final dividend)

5,617 6,739 6,590 Operating RoEV: 19.9%

• Operating return on EV of 19.9% is mainly driven by new business growth and unwind of discounting.
• Operating variance mainly constitutes the positive impact of mortality and persistency experience variance and modeling

enhancements.

• Non‐operating variances are mainly driven by equity and interest rate movements since March 2016.
• The interim shareholder dividend of Rs 169 Cr has been paid during the year and a final dividend of Rs 149 Cr will be accounted

post 31st March 2017. Post the payment of the final dividend, the closing EV will be Rs 6,590 Cr.

28

Awards and recognitions for Max Life

CELENT MODEL

INSURER AWARD in the Asia Pacific Region

Best use of six sigma in banking and financial sector ‐ Insta claim (1 day approval) Best Life Insurance company Best business leader – Sumit Rai

“Industry First” trend setter “Industry First” trend setter

2

Setting higher benchmark with every award Setting higher benchmark with every award

1

g y g y y

• “ASSOCHAM award 2016” for excellence in corporate governance
• “e‐Business Leader” 2017 at the ‘Finteleket Insurance Awards 2017’
• Project "Instaclaims ‐ Claims approval in 1 day" won the Best project for use of Six Sigma in Banking and

Finance Industry at World Quality Congress ‐ Global Awards

• “Golden Peacock Award 2016” for excellence in corporate governance
• “ Best compliance team award 2016” at the compliance 10/10 awards organized by Legasis
• “IDC Insights award 2016” for Tech Excellence in Revenue Generation for developing innovative mobility apps
• Celent Asia award for best technology insurer
• Recognized as “Best BFSI Brand 2016” by Economic Times
• Recognized as “Best Life Insurer” 2016 by Outlook Money
• “Asia’s Most Admired Brand 2016“ in the Insurance category by White Page International, 2016
• Ranked 46th amongst India's top 100 best companies to work for 2016; featured for 5th consecutive year
• Bronze in ASQ‐International Team Excellence Awards for quality project “ Reducing 7 days POS TAT”
• Bronze in ASQ‐South East Asia Team Excellence Awards for black belt project “ Enhancing NACH*registration

ratios”

• “Silver award” at 10th QCI‐DL Shah Quality award 2016
• “Asia Pacific Quality Organization award, 2016” for global performance excellence
• “Ramakrishna Bajaj National Quality” award‐winner in service category
• “India Insurance awards 2016” in the category of E‐business leader, Agency Efficiency and Claim service leader
• First company to provide freelook period of 15 days to the customer
• First company to start toll free line for agent service
• First life insurance company in India to implement lean methodology of service excellence in service industry
• First Indian life insurance company to start service center at the regional level
• First life insurance company in India to be awarded ISO 9001:2008 certification

29 Investor Release

Awards and Accolades

* NACH: National Automated Clearing House ; POS TAT: Policy Operations servicing turnaround time

Thank you

31

Annexure

32

Rank Company Individual new business premium (Rs Cr) FY17 FY16 Growth (%) Private Market Share (%) 1 ICICI Prudential 6,408 4,968 29% 22.3% 2 SBI Life 5,938 4,276 39% 20.7% 3 HDFC Life 3,636 3,333 9% 12.7% 4 Max Life 2,639 2,103 25% 9.2% 5 Kotak Life 1,202 939 28% 4.2% 6 Tata AIA 1,048 605 73% 3.7% 7 PNB MetLife 1,015 916 11% 3.5% 8 Bajaj Allianz 1,010 717 41% 3.5% 9 Birla Sunlife 922 682 35% 3.2% 10 Reliance Life 690 894 ‐23% 2.4% Others 4,192 3,274 28% 14.6% Private Total 28,700 22,706 26% LIC 24,519 21,369 15% Grand Total 53,219 44,076 21% Market Share of private players 53.9% 51.5%

Max Life maintains 4th rank among private players

Key Business Drivers Unit Quarter Ended Q‐o‐Q Growth Year Ended Y‐o‐Y Growth Jun'16 Jun'17 FY'16 FY'17

a) Individual Adjusted Premium

• Rs. Crore

384 458 19% 2,103 2,639 25% b) Gross written premium income

• Rs. Crore

1,746 2,007 15% 9,216 10,780 17% First year premium 382 453 19% 2,083 2,646 27% Renewal premium 1,175 1,342 14% 6,334 7,114 12% Single premium 189 212 12% 799 1,020 28% c) Shareholder Profit (Pre Tax)

• Rs. Crore

106* 106 ‐ 511 768 50% d) Cost to Gross Premium % 26.7% 26.5% (24 bps) 23.0% 24.3% >100 bps e) Conservation ratio % 86.5% 92.0% >100 bps 85.9% 88.6% >100 bps f) Average case size(Agency) Rs. 42,787 45,965 7% 36,747 46,713 27% g) Number of agents (Agency) No. 48,611 53,120 9% 45,275 54,283 20% h) Share Capital

• Rs. Crore

1,919 1,919 ‐ 1,919 1,919 ‐ i) Individual Policies in force

• No. Lacs

37.42 39.06 4% 37.60 39.12 4% j) Sum insured in force

• Rs. Crore

3,27,172 3,90,017 19% 2,71,633 3,77,572 39%

Investor Release 33

Performance update‐ Q1FY18 and FY’17

*Higher Q1’FY 16‐17 profit is due to one‐time non operating gains realization primarily from investment income

34 Investor Release

Overview of the components of the EV as at 31st March 17

Note: Figures in Rs Cr. and may not add up due to rounding

Net worth and EV VIF

Present Value of Future Profits (PVFP) Rs 4,861 Cr Value of Inforce (VIF) Rs 4,192 Cr

Time value of financial options and guarantees Frictional cost

Net Worth Rs 2,547 Cr

Market value of Shareholders’ owned assets over liabilities

EV Rs 6,739 Cr

Cost of residual non‐hedgeable risks

TVFOG Rs 16 Cr CRNHR Rs 568 Cr FC Rs 85 Cr

• 1. The deductions for risks to arrive at the VIF represent a reduction of 14% in the PVFP. The largest deduction is in respect of CRNHR.
• 2. Within CRNHR, persistency risk constitutes the largest risk component.

35 Investor Release

Value of New Business and New Business Margins for FY’2017

Note: Figures in Rs Cr.

Description FY’17 APE 1 2,657 Value of New Business (VNB) 499 New Business Margin (on actual costs) 18.8%

• The VNB is accumulated from the point of sale to the end of the reporting period (i.e. 31st March 2017), using the beginning of

respective quarter’s risk free yield curve.

• VNB of Rs 499 Cr and a new business margin of 18.8% is calculated at actual costs. There was no cost overrun during the year.
• The negative impact on new business margin due to reduction in interest rates during the year is compensated by shift in

product mix towards protection oriented products.

1 Annual Premium Equivalent (APE) is calculated as 100% of regular premium + 10% of single premium.

36 Investor Release Note: Figures in Rs Cr.

Sensitivity analysis as at 31st March 17

Sensitivity EV VNB Value (Rs Cr) % change Value (Rs Cr) % change Base Case 6,739 ‐ 499 ‐ Lapse/Surrender ‐10% increase 6,614 ‐2% 471 ‐6% Lapse/Surrender ‐10% decrease 6,873 2% 530 6% Mortality ‐10% increase 6,656 ‐1% 482 ‐3% Mortality ‐10% decrease 6,823 1% 517 4% Expenses‐10% increase 6,683 ‐1% 475 ‐5% Expenses ‐10% decrease 6,795 1% 523 5% Risk free rates ‐1% increase 6,578 ‐2% 529 6% Risk free rates ‐1% reduction 6,882 2% 460 ‐8% Equity values‐ 10% immediate rise 6,790 1% 499 negligible Equity values‐ 10% immediate fall 6,689 ‐1% 499 negligible

• 1. Reduction in interest rate curve leads to an increase in the value of assets which offsets the loss in the value of future profits.
• 2. Risk free rate sensitivities allow for the change in cost of hedging due to derivative arrangements. The cost of hedging reduces under

the risk free rate reduction sensitivity and increases under the risk free rate increase sensitivity.

Investor Release 37

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 FIMMDA1 as at 31st March 2017.

The spot rates beyond the longest available term of 30 years are assumed to remain at 30 year term spot rate level. The VNB is calculated using the beginning of respective quarter’s risk free yield curve (i.e. 31st March 2016, 30th June 2016, 30th September 2016 and 31st December 2016).

• No allowance has been made for liquidity premium because of lack of credible information on liquidity spreads in the

Indian market.

• A flat rate adjustment is made to the yield curve such that the market value of government bonds is equal to discounted

value of future cash flows of those bonds.

• Samples from the un‐adjusted 31st March 2017 spot rate yield curve used:

Demographic Assumptions

The lapse and mortality assumptions are approved by a Board committee and are set by product line and distribution channel

• n a best estimate basis, based on the following principles:
• Assumptions are based on last one year experience and expectations of future experience given the likely impact of current

and proposed management actions on such assumptions.

• Aims to avoid arbitrary changes, discontinuities and volatility where it can be justified.
• Aims to exclude the impacts of non‐recurring factors.

1 Fixed Income Money Market and Derivatives Association of India

Year 1 2 3 4 5 10 15 20 25 30 + Mar17 6.36% 6.57% 6.68% 6.88% 6.78% 7.21% 7.38% 8.14% 7.93% 7.26% Mar16 7.29% 7.39% 7.49% 7.55% 7.77% 7.48% 8.22% 8.00% 8.30% 8.13% Change (0.94%) (0.81%) (0.81%) (0.67%) (0.98%) (0.27%) (0.84%) 0.14% (0.36%) (0.86%)

Investor Release 38

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 expected to be incurred by the Company over the expense loadings assumed in the calculation of PVFP.

• Future CSR related expenses have been taken to be 2% of post tax (risk adjusted) profits emerging each year.
• Expenses denominated in fixed rupee terms are inflated at 6.25% per annum.
• The commission rates are based on the actual commission payable, if any.

Tax

• The corporate tax rate is assumed to be 14.42% for life business and nil for pension business.
• For participating business, the transfers to shareholders resulting from surplus distribution are not taxed as tax is assumed

to be deducted before surplus is distributed to policyholders and shareholders.

• Service tax is assumed to be 15% (including all relevant cess).
• The mark to market adjustments are also adjusted for tax.