Max Financial Services Limited Investor Presentation June 2020 - - PowerPoint PPT Presentation

Max Financial Services Limited

Investor Presentation

June 2020

 Max Financial Services

SECTION I

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

3

Sevabhav Excellence Credibility

• Positive social impact
• Helpfulness
• Culture of Service
• Mindfulness
• Expertise
• Dependability
• Entrepreneurship
• Business performance
• Transparency
• Integrity
• Respect
• Governance

Max Group – Overview

4

49.7% 40.9%

Senior Living and Skilling businesses

Max Group - Sponsors

Real Estate, Manufacturing & Other businesses

72.52%^ 51% 28.3% 100% 100% 100% 100%

Life Insurance Business Holding Companies Operating Companies Relatively stable, profitable and dividend paying Growth businesses Entrepreneurial Ventures

^ Max Life to be 70:30 JV with Axis Bank post series of transactions

• Independent living - Residencies
• Assisted Living - Care Homes
• Homecare - Care@Home

100%

Evolution of Max Group

5

Started its journey with Manufacturing & trading businesses

• Pharma: Penicillin-based drug
• Packaging Films: Max Speciality Films
• Electronics: Partnered with Avnet
• Cellular services: JV with Hutchison
• Paging services: Tie-up with Motorola
• Communication & Satellite: Comsat JV
• Printed Circuit Board: JV with Atotech
• Divestment:

Divested 40% stake in Telecom business for a gain of 488 Cr

Demerger, Wider world of businesses through MVIL, Portfolio rebalancing, Holistic Senior care service provider :

• Demerger: Spilt into 3 entities, Max Financial,

Max India & Max Ventures

• Wider world of businesses : MVIL forays into

Real Estate; NYL acquires 22.5% stake in MVIL; Toppan inducted as JV partner in Max Speciality Films

• Re-balancing Portfolio: MHC merged with

Radiant to create 3rd largest Hospital chain; True North acquired Max’s stake (51%) in Max Bupa for Rs 543 Cr

• Holistic Senior care service provider: Antara

aspires to create an ecosystem for seniors

• ffering a blend of lifecare & lifestyle products.

First wave: Early years, Started with Manufacturing Businesses (1982 – 2000)

Reinvented itself … Shifted from B2B to B2C :

• Life Insurance: JV with NYL in 2001, new

JV partner MSI in 2012

• Health Insurance: JV with Bupa in 2009
• Healthcare: JV with LHC in 2012, LHC

equalize stake in 2014 invested 766 Cr

• Senior Living: Launched first community

in Doon in 2013

• Fund Raised: Warburg invested 340 Cr in

2005; 1000 Cr QIP in 2007; IFC invested 450 Cr till 2009; GS invested 522 Cr in 2010

Second wave: Group reinvented from a B2B conglomerate to a B2C company (2000 – 2014) Third wave: Corporate restructuring to unlock value & Portfolio Rebalancing (2015-20)

Journey of Successful Partnerships

6

Past JV Partners Current JV Partners Marquee Investors

MFS – Board of Directors

7

Chairman and Founder

• Mr. Analjit Singh

Founder and Chairman of Max Group. Awarded with highest civilian honor, the Padma Bhushan Independent Director

• Mr. Aman Mehta

Former CEO of HSBC Asia Pacific with 35 yrs of

• experience. Serving on the Board of Vedanta,

TCS, Tata Steel, Wockhardt & Godrej Consumer Independent Director

• Mr. D. K. Mittal

Former IAS officer of 1977 batch and has served the government of India in various capacities Managing Director

• Mr. Mohit Talwar

Seasoned professional with 36 years of experience in Corporate Finance and Banking Director

• Mr. Sahil Vachani

CEO & Managing Director of Max Ventures and Industries Limited. Responsible for the overall strategic vision and direction of the company Independent Director Sir Charles Richard Vernon Stagg Currently the Chairman of Rothschild and Co,

• India. He is a Director of the JP Morgan Asian

Investment Trust Independent Director

• Mr. Jai Arya

Seasoned professional with 37 years experience with Bank of New York Mellon and Bank of America Independent Director

• Mrs. Naina Lal Kidwai

Former Chairman of HSBC India. Serving on the Board of L&T, Cipla, Nayara Energy, Lafarage Holicim

Max Group – Senior Management

8 Rajit Mehta

• Managing Director& CEO, Antara Senior Living
• Group role to oversee Max India New Growth Initiatives

and Advisor for Max Group’s Human Capital Tara Singh Vachani

• Executive Chairman, Antara Senior Living
• Director in Max India & Max Healthcare

Ramneek Jain

• CEO, Max Specialty Films

Sahil Vachani

• MD & CEO, Max Ventures and Industries Limited
• Director in Max Financial & Max Life Insurance

Rajender Sud

• CEO, Max Skill First Limited

Prashant Tripathy

• Managing Director & CEO, Max Life Insurance

Mohit Talwar

• Vice-Chairman, Max Group
• Managing Director, Max India Limited
• Managing Director, Max Financial Services
• Vice-Chairman, Max Ventures and Industries Ltd
• Chairman, Max Specialty Films

Max Group Overview

9

USD 2.5 billion Revenues… 4 Mn Customers… 16,000 Employees… ~46,000 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

basis FY20 numbers for conversion assumed 1 USD = INR 75

High pedigree of long-term investor base

10 Promoter 28.3% KKR 6.7% Mutual Funds 27.2% FII- Others 23.9% Public 13.9%

Shareholding Pattern as on 31st Mar 20 ▪ KKR ▪ Baron Emerging Market Fund ▪ Ward ferry ▪ New York Life ▪ Vanguard ▪ Norway Government Pension Fund ▪ Jupiter ▪ Blackrock ▪ Neuberger Berman ▪ Eastspring ▪ Dimension ▪ Mirae Mutual Fund ▪ HDFC Mutual Fund ▪ Reliance Mutual Fund ▪ Kotak Mutual Fund ▪ ICICI Prudential Mutual Fund ▪ Aditya Birla Sunlife Mutual Fund ▪ DSP Mutual Fund Shareholding concentrated with Marquee Investors Number of outstanding shares: 26.95 Cr.

 Recent Developments in Max Financial & Max Life

SECTION II

MSI & Axis Transaction Summary

12

MSI Transaction ▪Preferential allotment to MSI in MFS against swap of shares held by MSI in Max Life ▪MFS to acquire balance 5.17% stake from MSI at Rs 85 per share for cash consideration of Rs 843 Cr ▪Transaction expected to be completed by Jun’20, subject to receipt of all regulatory approvals (DEA, IRDAI & CCI) Axis Transaction ▪ Axis Bank to acquire 29% stake in Max Life from MFS at a valuation as per Tax Book value (currently at Rs 28.62/sh^; ~ Rs 1,600 Cr) ▪ Post completion of series of transactions Max Life will be a 70:30 JV between MFS and Axis Bank ▪ This transaction brings together the 3rd largest private bank and 4th largest private life insurer in the country ▪ It will significantly improve Max Life’s competitive position vis a vis its Peers, including other large bank owned private life insurers ▪ Axis & Max Life had a successful business relationship with 19 lacs customers and premium generated over Rs. 38,000 Cr ▪ This JV will govern this in the spirit of equal partnership. Max Life will have 4 directors nominated by MFS and 3 by Axis ▪Transaction expected to be completed by Dec’20, subject to receipt of all regulatory approvals (RBI, IRDAI & CCI)

Transaction Structure

13 Max Financial (MFSL) Max Promoter Public

28.31% 71.69%

Max Life (MLIC)^

Max Financial (MFSL)

Mitsui Sumitomo Axis Bank

72.52% 25.48% 1.99%

Max Financial (MFSL) Max Promoter Public

22.11% 56.02%

Mitsui Sumitomo

21.87%

Final structure (Post completion of series of transactions step wise detail given below ) Current Structure

Note: MFS Shareholding on undiluted basis

Max Life (MLIC)

Max Financial (MFSL)

Axis Bank

70% 30%

▪ Step 1: MSI to hold 21.87% stake of MFS stake in exchange of 20.57% of Max Life through a Share SWAP transaction ▪ Step 2: MFS & MSI to acquire 1% stake in Max Life from Axis in the ratio of 74: 26 ▪ Step 3: MFS to sell 29% stake in Max Life to Axis at Tax Book Value ▪ Step 4: MFS to acquire balance 5.17% stake from MSI

 Max Life Insurance – Insurance Opportunity

SECTION III

Retail wealth in India - Increasing preference for avenues other than cash and bank deposits Household Savings flow - ~3% de-growth in financial assets flow in 2019 - Lowest in last 5 years

Weak macroeconomic environment led to de-growth in financial assets flow; Life Insurance is among preferred asset class in India

Amount in INR Bn

X% CAGR

59% 53% 45% 53% 50% 52% 48% 41% 47% 55% 47% 50% 48% 52% 2008 2010 2015 2016 2017 2018 2019

Financial Assets Physical Assets

2015 – 2019 CAGR

10% 12%

Cash Bank Deposits Direct Equities Insurance AUM Mutual Funds

13% 20% 10% 9% 4% 6% 10% 7% 17% 16% 46% 42% 2015 2019

Growth 2019 Vs 2015 Others 10% 4% 26% 9% 24% 12%

Source: Karvy India Wealth Report 2015/2016/2017/2018/2019 Direct Equities only for retail investor class; Bank Deposits include FD, CA deposits, SA deposits, NRI deposits Source: Handbook of Statistics on Indian Economy 2016/2017/18/19

15

` 226 lakh cr

High Savings Culture though savings rate slowing due to consumption

Amount in INR Trillion

Source: Handbook of Statistics on Indian Economy 2016/2017/18/19 9.3 10.6 11.9 12.6 15.0 16.1 20.6 20.0 13.9 14.7 14.2 15.1 13.2 15.9 19.1 21.8 0.3 0.4 0.4 0.5 0.5 0.5 0.4 0.4

• 2.9
• 3.3
• 3.6
• 3.8
• 3.9
• 4.7
• 7.4
• 7.7

24% 22% 20% 20% 18% 18% 19% 18% FY'12 FY'13 FY'14 FY'15 FY'16 FY'17 FY'18 FY'19

Gross Financial Savings Savings in Physical Assets Gold and Silver Financial Liabilities Household savings/ GDP (%)

Significant opportunity for Life Insurance to grow in India on the plank of ensuring disciplined savings over a long term – Only asset class which is effective in addressing the gap

Gap between other countries and India is significant for Life Insurance density India lags behind other developed countries on Life Insurance penetration

Source: IRDAI Annual Report 2016/17/18/19, ^ AUM under equity finds by retail investors from AMFI website

Life Insurance Penetration (Premium as % of GDP), CY 2018 Life Insurance Density (Premium per capita – USD), CY 2018

17.5% 16.8% 6.7% 6.1% 2.7% 2.3% Taiwan Hong Kong Japan South Korea India China

~ 2 Bps decline from 2017

8,204 4,320 2,629 221 55 Hong Kong Taiwan Japan China India

Long Term Nature of Savings

• Life Insurance inculcates disciplined savings mindset which help retain AUM for longer

– For the mutual fund industry, only 40-45%^ of the assets are more than 2 years old – For better Asset Liability management, Banks preference remains for shorter tenure deposits – Investment in direct equities impacted by performance of stock market and does not ensure discipline

16

Urbanization, improving affluence, emergence of nuclear families will continue providing impetus to the Life Insurance industry

Source: Nielsen Analytics, Mumbai, India. MME: Metro, Town & Rural Skyline of India 2015-16

India has witnessed rapid urbanization, aids affluence and emergence of nuclear families

18% 20% 23% 26% 28% 31% 43% 53% 1961 1971 1981 1991 2001 2011 2035 2050

Urban Population (%) Middle class is likely to increase rapidly, especially in Top 150 cities; Top 19 cities continue to hold bulk of household savings as well affluent households

Source: World Urbanization Prospects: The 2018 Revision, United Nations ^ Source: BCG: The New Indian

17 Savings

Tier 1 19 cities with 2 Mn+ pop. Tier 2 35 cities with 1-2 Mn+ pop. Tier 3 56 cities with 0.5-1 Mn+ pop. Tier 4 415 cities with 0.1-0.5 Mn+ pop.

Next billion (0.15 – 0.5 Mn) Aspirers (0.5 – 1 Mn) Affluent (>1 Mn) 2 Mn 2 Mn 4 Mn 5 Mn 3 Mn 1 Mn 1 Mn 2 Mn 7 Mn 2 Mn 1 Mn 2 Mn Strugglers (<0.15 Mn) 4 Mn 4 Mn 9 Mn 8 Mn

20% 30% >100% 50%

Total Savings ` Trillion| % 3.5 | 15% 1.5 | 7% 3.1 | 14% 9.9| 43% Estimated no. of Households*

* Based on Annual gross household income in `

Increase (2016-25)^

2.2% 2.6% 2.3% 2.5% 2.5% 4.1% 4.0% 4.0% 4.6% 4.4% 3.4% 3.2% 3.1% 2.6% 2.7% 2.7% 2.8% 2.7% 18

Life insurance industry has seen multiple cycles since 2001. Recent structural changes in the economy have resulted in positive flow towards financial assets aiding the insurance industry

Phase 4 – Reinvigoration (2015-date) Phase 2 –Expansion (2004-2008) Phase 3 – Discovering New Normal (2009-2015)

▪ Global Financial crisis/ Bearish Indian Stock Market ▪ Frequent regulatory interventions – New ULIP guidelines – New product guidelines ▪ Equity Bull Run ▪ ULIP introduced by private players ▪ Stock Market Revival ▪ De-monetization ▪ GST Implementation ▪ Regulations: – Expense of Management Guidelines – Open Architecture for Corporate Agents – Distributor Compensation Guidelines

Individual FYP adjusted for Single Premium (INR Billion)

xx

LIC Private Players

(Percentage of insurance premium to GDP)

Phase 1 – Joyful Entry (2001-2003)

▪ Entry of Private Players

Source: IRDAI Annual Reports, League tables 100% 98% 94% 85% 75% 66% 64% 50% 43% 48% 54% 63% 62% 62% 51% 48% 46% 44% 42% 43% 100 100 120 140 160 210 403 527 472 550 504 479 470 454 408 441 533 635 692 735 FY02 FY01 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY14 FY13 FY15 FY16 FY19 FY17 FY18 FY20

Life insurance penetration

YoY Growth basis Individual Adjusted FYP

Industry Landscape (FY’20): Total Industry grew by 6%, while Pvt. players grew by 5% and LIC by 8%)

Source: Life Insurance Council | IRDAI

21% 19% 9% 6% 25% 22% 21% 5% Industry Max Life Max Life’s private market share

FY’17 FY’18 FY’20 9% 10%

Private Industry YoY growth

24% 14% 5%

Max Life’s total market share

5% 6%

Max Life grew at 17% till YTD Feb, more than the private industry growth rate of 14%. Full year growth impacted by COVID-19 in Mar’20

FY19 26% 10% 6% 9% 5%

19

 Max Life Insurance – Business Overview

SECTION IV

Max Life has an extensive presence across India through its own offices and distribution partners and is the 4th largest private Life Insurance player in the country

356 Own Branch Units 6000+ Partner

Branches

4th Largest AUM

Max Life has more ~6500 Point of Sales across the country

~9L Crores

Sum Assured

#3 Claims Paid ratio in industry* 4th Largest

Private Life Insurer^

~68K Cr

Assets Under Management

~1 Cr+ Lives Insured** Till Date 35 Lacs+ Active Customers** ~46K Agents ~60 Distribution

Partners

~9.7% Private Market Share^

^By Individual New Sales **Individual customers *As per IRDAI report 2018-19

21

Max Life Insurance’s road map to becoming India’s most admired life insurance company

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

• f our customers

Quality of Advice Superior Human Capital Financial Strength Service Excellence Value Driven Culture Corporate Governance

Inspire People to increase the Value of their Life “I am the Difference”

Caring: Respect people, Act with compassion Collaboration: Stronger together Customer Obsession: Customer at the core Growth Mindset: Curious to learn, Hungry to win Vision Integrity Purpose We Stand for Values

22

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

Chairman and Founder

• Mr. Analjit Singh

Founder and Chairman of Max India. Awarded with highest civilian honor, the Padma Bhushan Director

• Ms. Marielle Theron

Fellow of the Society of Actuary (FSA). She is a Principal of Erlen Street Corporation, Switzerland Director

• Mr. D. K. Mittal

Former IAS officer of 1977 batch and has served the government of India in various capacities Director

• Mr. Hideaki Nomura

Seasoned professional with 29 years experience in financial industries Managing Director and CEO

• Mr. Prashant Tripathy

A seasoned professional with over two decades

• f experience. Appointed as Managing Director

and CEO in January 2019 Director

• Mr. Sahil Vachani

Responsible for the overall strategic vision and direction of the company Director

• Mr. Mohit Talwar

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

• Mr. Rajit Mehta

Currently the CEO and MD of Max Healthcare Institute and also the founding member of Max Life Director

• Mr. Deepak Bhattasali

An academic associated with Georgetown University and has also worked extensively with the World Bank Deputy Managing Director

• Mr. V Viswanand

An industry veteran with a dynamic presence in the financial services sector. Director

• Mr. K. Narasimha

Murthy Serving on the Board of ONGC, LIC Housing, STCI, Infiniti Retail‚ APSFC, Max Bupa and NABARD Director

• Mr. Pradeep Pant

Seasoned business leader with experience in leading FMCG companies like Mondelez, Gillette and Nestle

23

Director

• Mr. Naoyuki Sakaki

Associated with MSI since 1987 and has more than 30 years experience in insurance industry.

Executive Management Team has rich insurance experience and spent ~100 years at Max Life combined

5+ years 23+ years Yahoo, Sapient <1 year 23+ years ITC, Cognizant, Brillio Technologies- Incendo Technologies 8+ years 28+ years Standard Chartered Bank, ABN AMRO, RBS 11+ years 20+ years Prudential UK Metlife UK 8+ years 28+ years GE, SRF Finance, Eicher Tractors 19+ years 28+ years ANZ Grindlays Bank 4+ years 25+ years Global Logic, MetLife, paternoster, JLT, Aviva Life, DCM 7+ years 16+ years PwC, Infosys, Religare Enterprises

Stint in Max Total Exp. Previous Org.

Director & Chief Investment Officer Director & Appointed Actuary Director & Chief Operations Officer Director - Legal

• Compliance &

Regulatory Affairs Director & Chief Marketing Officer SVP & Head – Strategy, Analytics & Investor Relations Director & Chief People Officer

V Viswanand

EVP & Deputy Chief Financial Officer Deputy Managing Director

Manu Lavanya Aalok Bhan Jose John Mihir Vora Shailesh Singh Amitabh Lal Das Amrit Singh Mandeep Mehta

5+ years 26+ years HSBC Global Asset Management, ICICI Prudential‚ Birla Sun Life AMC 13+ years 17+ years Accenture, Cognizant, ICICI Prudential SVP & Chief Risk Officer

Sachin Saxena ▪ Stint in Max : 13+ years ▪ Total Experience: 24+ years ▪ Previous Organizations: Tata Steel, GE

Prashant Tripathy Managing Director & CEO

Max Life Management Team

24

Pvt Market Share 10% [10%] Individual APE Rs 4,116 Cr [Rs 3,917 Cr] Gross Written Premium Rs 16,184 Cr [Rs 14,575 Cr] AUM Rs 68,471 Cr [Rs 62,798 Cr] Profit Before tax Rs 598 Cr [Rs 623 Cr] Net Worth Rs 2,570 Cr [Rs 2,761 Cr] Policyholder Cost to GWP Ratio 20.8% [20.0%] Policyholder Expense to GWP Ratio 14.5% [13.2%] New Business Margins RoEV 20.3% [21.9%] Embedded Value* 9,977 [8,938] Solvency 207% [242%] VNB 897# [856] Policies Sold (‘000) 597 [645] Claim Settlement Ratio 99.22% [98.74%] Protection Mix**

Financial Performance Summary FY20

5% 9% 5% 10 bps

• 4%

11% 126 bps

Individual Group Total 8% [6%] 5% [4%] 13% [10%]

340 bps 4 bps

Structural Actual 24.3% [22.5%] 21.6%# [21.7%]

20.3% *Embedded Value is pre-dividend, Growth on Embedded value is operating RoEV, **Group protection (incl. Group credit life adjusted for 10% for single premium and term business); Figures in [brackets] are for previous year numbers # VNB and Margins are post adjustment for effective tax rate 160 bps 35% 48 bps

25

• 7%

80 bps

• 8%

Max Life has delivered strong performance on both new business and renewal business; Maintained 4th rank in the private industry

Individual Sum Assured of New business- 7% growth in FY20 is lower due to introduction of limited pay protection products

7,081 8,108 9,415 10,600 FY17 FY18 FY19 FY20

Renewal Income

88,451 122,036 171,063 183,019 FY17 FY18 FY19 FY20 10,780 12,501 14,575 16,184 FY17 FY18 FY19 FY20 2,657 3,248 3,950 4,149 FY17 FY18 FY19 FY20

Mkt Share#

Gross Written Premium New Business Premiums (on APE basis)

Pvt Ind Rank 4 4 4 4 9.0% 9.7% 9.7% 9.2% Amount in INR Cr Amount in INR Cr Amount in INR Cr Amount in INR Cr

X% CAGR Total APE includes Individual and GCL APE. It excludes Group term Loan # on Adj FYP basis

5% 13% 11% 26 7%

Margins (post-overrun)# VNB (post over-run)# Product Mix – Shifting towards a balanced product mix

Shift in product mix towards NPAR resulted in 180 bps improvement in structural margin; Current cost VNB growth in line with the sales growth owing to investments in growth and COVID impact

18.8% 20.2% 21.7% 21.6% FY17 FY18 FY19 FY20 499 656 856 897

FY 17 FY 18 FY 19 FY 20 Amount in INR Cr

X% CAGR

54% 43% 40% 30% 4% 4% 6% 8% 3% 4% 4% 5% 9% 8% 9% 18% 30% 41% 42% 38%

FY 17 FY 18 FY 19 FY 20

PAR Individual Protection Group Protection Non PAR- Savings ULIP

7%

280 bps

5% 8% 10% 13% 27

Margins (Structural)

18.0% 20.2% 22.5% 24.3% FY17 FY18 FY19 FY20

630 bps

#VNB and margins for FY19 and FY20 are post the adjustment of effective tax rate. YTD Feb VNB(post overrun) growth was at ~18%

Solvency Ratio (pre dividend) - maintained well above the regulatory requirement Return on Equity (RoE)# - maintained at consistently more than 20% Opex to GWP*- Increase in FY20 ratio largely on account of investments in proprietary channels, growth initiatives and slowdown impact of COVID

Efficient capital management with consistent RoE of 20%+… best in class among financial services

14.8% 12.9% 13.2% 14.5% FY17 FY18 FY19 FY20 30% 22% 21% 20% FY 17 FY 18 FY 19 FY 20 309% 275% 242% 207% FY17 FY18 FY19 FY20

150% Solvency Limit

27bps

* Refers to the policyholder expense to GWP ratio; # ROE is PAT as a ratio of average Net worth during the year

28

• 206
• 336
• 587
• 761

761 726 1015 1189

FY17 FY18 FY19 FY20 NB Strain BackBook Surplus

Underwriting Profits - Growth in FY20 inforce profits surpassed strain net of

• verruns

SH Surplus 105 138 128 111

Amount in INR Cr

Sensitivity Operating Return on Embedded Value Operating Variance - has been generally positive over the years Embedded Value (EV)

Embedded value compounds at 15% with operating RoEV for FY20 at 20.3%

6590 7509 8938 9977 FY17 FY18 FY19 FY20 19.9% 20.6% 21.9% 20.3% FY17 FY18 FY19 FY20 86 62 126 103 FY 17 FY 18 FY 19 FY 20

Amount in INR Cr Amount in INR Cr

Item Embedded Value Value of New Business

• 10%

10%

• 10%

10% Lapse / Surrender 1%

• 1%

4%

• 4%

Mortality 2%

• 2%

5%

• 5%

Expense 1%

• 1%

7%

• 7%

** EV is Post-dividend

12% 29

Max Life has consistently grown its Asset Under Management

ULIP: Healthy mix of Debt and Equity Assets Under Management - MLI is the 4th largest manager of private LI AUMs*

30 16

17 20 19

29 35 43 49 44 52 63 68

FY17 FY18 FY19 FY20 ULIP Controlled Fund

46% 49% 49% 57% 54% 51% 51% 43%

FY 17 FY 18 FY 19 FY 20

Debt Equity

Amount in INR ‘000 Cr

92% 92% 91% 93% 8% 8% 9% 7%

FY 17 FY 18 FY 19 FY 20

9%

Par fund size ~38K and controlled fund crossed 50K as on 30th April More than 95% of debt investments is in sovereign papers and AAA rated securities Controlled: Healthy mix of Debt and Equity

* AUM growth till YTD Feb was at 17%

Headcount - In line with the growth aspirations, headcount has been ramped up by 24% in FY20, largely towards distribution buildup Employee Engagement^ - Consistently amongst top decile Leadership Experience – Almost half of the leadership has been with the company for more than a decade* Great Place to Work Survey - Only Life insurance Company amongst Top 100 India’s best place to work for in 2019; rank improved since 2015

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

51 46 43 35 2015 2016 2018 2019 83% 83% 97% 96% 2016 2018 2019 2020

<2 17% 2-5 14% 5-10 22% >10 47%

9446 10226 12082 15020 FY17 FY18 FY19 FY20 24%

*Leadership defined as Vice President and above, Data as of Mar 31, 2020 ^ Conducted by IBM Kenexa till 2018 and Willis Tower Watson in 2019 and 2020. 2019 score is adjusted for methodology change done in 2020

Top 15 BFSI #1 in LI Total leadership count is 270 31

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

▪ Winner of CII Industry Innovation Award ▪ Outlook Money Award- Best Life Insurer ▪ Most Admired Brand By White Paper International ▪ BFSI Smart Tech Awards 2019 - IPQ won the Best Use of Data and Analytics ▪ Golden Peacock award for Corporate Governance ▪ Silver Award at the ACEF 8th Global Customer Engagement Awards 2019 in the BTL Activities Category. ▪ Best Use Innovation In Loyalty Marketing -Virtual Reality at Customer Fest Show 2020 ▪ Smart Term Plan as Product of the Year award under the Term Life Insurance category, Nielsen Survey 2020 ▪ No. 1 in Customer Loyalty survey by IMRB ▪ Gold at ASQ World Conference ▪ Winner of IMC Ramkrishna Bajaj National Quality Award ▪ Winner of CII Industry Innovation Award ▪ Asia Pacific Quality Organization (APQO) award for global performance excellence ▪ Silver Award in ASQ ITEA 2019 for Sell Right for Customer Delight at Axis Bank ▪ Silver Award in the 12th QCI-DL Shah Quality Awards for Enhancing S2R Conversion% Select 60 offices in Agency. ▪ At CMO Asia Awards , won Best Term Plan Company of the Year ▪ Ranked 35th – India’s Best Companies to work for in 2019. Best in Insurance industry ▪ Top 25 BFSI companies to work for by Great Place to Work Institute, India in 2020 ▪ India’s Top 75 Workplaces for Women by Great Place to Work Institute ▪ Employee Engagement Leadership Award for “Best use

• f the Employee Award”

▪ Employee Engagement Leadership Award for “Best Social Responsibility”

32

 Max Life Insurance – COVID Response

SECTION V

Max Life responded immediately to COVID situation across key dimensions; All key processes were functional within 4 days of lock down initiation

Employees

▪ Established BCP protocols across

• rganization

▪ HR guidelines on Do’s and Don’ts, continuous communication, facility readiness for PPEs and sanitization ▪ Almost all employees enabled for work from home ▪ ~2k users enabled on VDI\VPN since Work from home kick-off ▪ Most outsourced vendors operating now at pre-covid efficiency

Customers

▪ Continuous communication with customers to provide reassurance regarding claims & existing policies ▪ 14% YoY increase in website customer service traffic in April, 37% decline in inbound calls at customer service helpline; website transactions up by 50%+ YoY for online payment in April ▪ More than 24 different mechanisms exist for paying premiums ▪ Enabled new liquidity options on website to strengthen customer retention ▪ Significantly increased digital touchpoints and work types to service customer

Distributors

▪ 100% enabled end to end digital selling across all distribution channels ▪ Frictionless journey ▪ 100% paperless, signature free journey ▪ Enhanced telemedicals grids and currently 1400+ functional diagnostic centers for physical medicals ▪ Overcame barriers to new agent licensing through innovative means – Top of the funnel interest up by ~50% ▪ ‘Max Life Suraksha Kavach’ launched for Agents to support on mortality, morbidity & liquidity during COVID

34

Guiding principles Immediate action taken

▪ Health and safety paramount ▪ Proactive customer communication ▪ No disruption in customer service ▪ Health and safety paramount ▪ Adequate support to Agents ▪ Enable distribution to continue working remotely

Key programs initiated to navigate through current situation and emerge stronger

COVID19

35

Digital Sales Products and Underwriting Cost rationalization Close to customer

▪ Distribution enablement for remote protection selling ▪ Enablement of Medical diagnostic network ▪ Product innovations for new opportunities ▪ Simplified and 100% digitized sales process enabled by digital tools ▪ Digital agent recruitment, training and onboarding ▪ Cross selling and virtual engagement with prospects ▪ Paperless onboarding ▪ Virtual sales governance ▪ Tactical and structural long term cost take out ▪ Reimagine the futuristic

• perating model

▪ Digitization for efficient backend operations ▪ Proactive communication around reassuring customers ▪ Enablement of service / request types on self- service / digital modes (non-physical) ▪ Customer enablers for premium payment

1 2 3 4

Risk monitoring framework for emerging operational and IT risk, credit risk, liquidity risk Furthering Human capital

▪ Engagement initiatives to keep employee morale high ▪ Infrastructure enablement and collaboration tools for work form home option ▪ Leverage existing virtual learning platforms for continuous learning

5

We also assessed how the current situation will effect our financial strength and asset portfolio; no immediate and medium term stress expected

Solvency

Key areas Results

Interest rate risk & Asset Liability Management Credit risk ▪ Manageable credit risk given high credit quality of bonds held; 95% & 99% exposure in AA+ and above bonds in PH & SH funds respectively (excl. YBL and Fixed-deposits) ▪ Limited exposure to sectors which may see stress over next 6-12 months from COVID19 ▪ No securities being impaired in the debt portfolio ▪ Strong solvency position at 207% as on March 31st, 2020. Stressed solvency in a 1-in-100 year event is also above internal thresholds. No immediate and medium term concerns on solvency given PAR & UL heavy portfolio ▪ Non-par savings products were assessed on lower interest rates and current FRA rates ▪ Even with the volatile market conditions, no material impact foreseen on the ALM position given there are sufficient net investments (based on in-force projections) expected over the long period Market risk ▪ Unit Linked: Robust performance both against the benchmark as well as that relative to the peers, on back of timely asset allocation bets along with high quality securities ▪ Controlled Fund: No equity securities qualifying for impairment, as of Mar’20 as well as Apr’20; increased frequency of monitoring impairment to fortnightly given current volatility

36

Liquidity risk ▪ Comfortable liquidity position in Policyholder funds (as on 31st Mar’20) over both short and medium term. Extreme stress testing of liquidity also depicts no concerns with >100% liquidity ratio given high level of investments in G-sec bonds ▪ Reasonable liquidity in the Shareholder fund (as on 31st Mar’20) to manage business expenses even with no renewal or new business

 Max Life Insurance – Strategy FY19-22

SECTION VI

Digital

▪ Increase protection penetration ▪ Drive Non PAR saving ▪ Tap into new growth opportunities like health and retirements ▪ Enhanced investment and mortality risk management Product innovation to drive margins ▪ Deepen Bancassurance partnerships ▪ On-board new distribution partners ▪ Scale up existing proprietary channels ▪ Opportunistic play for inorganic growth Predictable & Sustainable growth ▪ Continue with digitization agenda across the organisation ▪ Build intelligence (AI) in all digital assets ▪ Minimize back-office costs Digitization for efficiency and intelligence ▪ #1 position in 13M and 61M persistency ▪ Highest Relationship Net Promoter Score (NPS) in the industry Customer centricity across the value chain

Significant progress made across key strategic priorities

A

B D C

▪ Focus on increasing Protection penetration and NPAR savings contributed to increase structural margins from 22.5% to 24.3% ▪ Supplement retirement offering through ‘deferred annuity’ ▪ Executed FRA contracts to augment non-par appetite ▪ Entered into definitive agreements with Axis Bank* ▪ Extended corporate agency agreement with Yes Bank for 5 years ▪ Increase share of proprietary channels sales to ~31% from 29% ▪ Signed up with 28 new partners

▪ 98% of all policies digitally sourced - Achieved 71%+ Insta-issuance ▪ Revamped customer service website – 80% requests enabled through digital self service means ▪ Launch of Max Life Innovations Lab – Working with 7 startups ▪ Among the best website page load time in the industry ▪ Progressing well on AI and modernizing IT journey

▪ Claim paid ratio at 99.22% among the best in class ▪ Continued Improvement in NPS and among the best in class ▪ Focus required on persistency measures ▪ Improved brand consideration score

Progress in FY20 INITIATIVES

38

*subject to regulatory approvals

28% 27% 29% 31% 71% 72% 70% 68% 1% 1% 1% 1% FY17 FY18 FY19 FY20 Proprietary Banca Others 752 891 1162 1282 FY17 FY18 FY19 FY20

Bancassurance Channel (APE) - Growth in Banca channels has been ~15%, YTD Feb growth was ~16% Proprietary Channels New Business (APE) - Sales has grown at 19% CAGR since FY17, YTD Feb growth was ~20% Channel Mix - Max Life has focused on maintaining a balanced distribution mix

Max Life has focused on ensuring growth in both its Proprietary and Bancassurance channels

1,882 2,335 2,760 2,838 FY17 FY18 FY19 FY20 Amount in INR Cr

Amount in INR Cr

10% 3%

A

39 Axis’s Share 60% 57% 57% 59%

Bancassurance Product Mix - has been biased towards ULIPs to cater to target customer segments Proprietary Channels Product mix - biased towards traditional products and protection for driving margins

Product mix in proprietary and Bancassurance channels aligned to customer needs; Strategic focus on NPAR share increase to further strengthen the balanced mix

48% 39% 34% 25% 1% 2% 2% 4% 12% 11% 12% 24% 39% 49% 52% 47% FY17 FY18 FY19 FY20 ULIP NPAR-S NPAR-P PAR 73% 60% 58% 47% 10% 11% 14% 17% 2% 0% 3% 10% 15% 29% 26% 26% FY17 FY18 FY19 FY20 ULIP NPAR-S NPAR-P PAR

A

40

Focus has also been on ensuring that agents contribute atleast INR 50K per annum Recruitment growth rate slowed down in FY20, with the Agency initiative requiring a shift in new ADMs focus areas

Agency: Strategic focus on increasing agent productivity and retention (1/2)

26,096 25,497 30,355 31,296 FY17 FY18 FY19 FY20

Branch Units 203 205

22,039 22,177 26,052 23,432 FY17 FY18 FY19 FY20

FY20 Progress

▪ Engaged with consultants (ex-New York Life (NYL) to drive Agency Transformation Program ▪ Continued focus to increase top agent count ▪ Investment in alternate Agency models yielding results – 2-3x growth in all initiatives

334

A

777 1,104 1,356 1,274 FY17 FY18 FY19 FY20

Consistent focus on increasing the number of agents doing business of more than INR 10 lacs per annum Active agent productivity increasing year on year; dip in FY19 due to new offices

0.69 0.84 0.88 1.03 2.93 3.23 2.43 2.17 3.23 3.79 3.71 FY17 FY18 FY19 FY20

Active Agent Productivity Branch Prod (in Cr)

ADM and Active agent productivity in INR Lacs per month

BAU Agency

Number of agents with greater than Rs 10 lacs annual business* Number of agents doing business of more than Rs 50,000 per annum* Number of agents recruited Investor Release 41

391

Total Adj. MFYP by an agent in the same store offices

Focus has also been on ensuring that agents contribute atleast INR 50K per annum

Agency: Strategic focus on increasing agent productivity and retention

26,096 25,497 30,355 26,562 29,290 FY17 FY18 FY19 YTD Feb19 YTD Feb20

Branch Units 203 205

22,039 22,177 26,052 19,440 23,125 FY17 FY18 FY19 YTD Feb19 YTD Feb20

FY20 Progress

▪ Engaged with consultants (ex-New York Life (NYL) to drive Agency Transformation Program ▪ Continued focus to increase top agent count ▪ Investment in alternate Agency models yielding results – 2-3x growth in all initiatives

334

A

777 1,104 1,356 751 1,010 FY17 FY18 FY19 YTD Feb19 YTD Feb20

Consistent focus on increasing the number of agents doing business of more than INR 10 lacs per annum Active agent productivity increasing year on year; dip in FY19 due to new offices

0.69 0.84 0.88 0.83 1.01 2.93 3.23 2.43 1.94 1.90 3.23 3.79 3.05 3.26 FY17 FY18 FY19 YTD Feb19 YTD Feb20

Active Agent Productivity Branch Prod (in Cr)

Branch and Active agent productivity in INR Lacs per month

BAU Agency

Number of agents with greater than Rs 10 lacs annual business* Number of agents doing business of more than Rs 50,000 per annum* Number of agents recruited 42

391

Total Adj. MFYP by an agent in the same store offices

Recruitment growth rate, FY20 impacted due to COVID

334

Other Bancassurance Partnerships: YTD Feb growth was ~16% Axis Bank: YTD Feb growth was ~16%

Bancassurance partners continue to contribute strongly

Banca channels have grown at CAGR of 15% while increasing branch productivity, YTD Feb growth was ~16%

38 42 40 34 6,170 6,521 6,956 5,608

1,882 2,335 2,760 2,838 FY17 FY18 FY19 FY20 1,564 1,936 2,262 2,366 FY17 FY18 FY19 FY20 318 399 498 472 FY17 FY18 FY19 FY20

2,467 2,583 2,605 2,304 16 19 18 14 Branches (#) 3,703 3,938 4,351 3,304 Branch Productivity (lacs per annum) 52 57 54 47 Amount in INR Cr Amount in INR Cr Amount in INR Cr Branches (#) Branch Productivity (lacs per annum) Branches (#) Branch Productivity (lacs per annum)

3% 5%

• 5%

A

43

E-commerce: Max Life has focused it efforts in online towards driving protection

120 123 218 370 FY17 FY18 FY19 FY20 100 193 374 445 FY17 FY18 FY19 FY20 37.8 56.9 75.1 67.0 FY17 FY18 FY19 FY20 19.4 25.2 29.3 37.3 FY17 FY18 FY19 FY20

Brand Search Queries - have increased significantly over the years Online Leads - Due to deployment of technology smarts, leads have increased by ~350% in 3 years Website Traffic - Annual traffic to Max Life’s website has seen a significant increase over the last 4 years Policies – Steady growth in NOP contribution, drop in FY20 is driven by limited pay protection launch

FY20 Progress

▪ Robust growth in Direct business on back of Brand Search Queries ▪ Deployed frictionless journey with no document requirement for over 40%

• f B2C customers

▪ Increased contribution from affluent customer segments ▪ Launched industry-first initiative - “Buy Now Pay Later”

In Lacs

8% 10% 12%

Website Traffic in Lacs

A

Policies in ‘000s

Leads in FY16 baselined to 100 44

12%

Cross-selling Direct Channels: Max Life has set up a channel focused exclusively on cross-selling

FY20 Progress

▪ Launched various digital assets and 100% adoption

• f tools increased

efficiency ▪ Contribution of affluent customers increased in both in value and number

• f policies terms

▪ High focus on protection led to significant increase in protection penetration ▪ Launched alternate models like Business Insurance Cross-sell Policies - Strong growth in number of cross-sell policies New Business Premium from direct channels

Amount in INR Cr Policies sold in FY16 baselined to 100 90 124 182 245 FY17 FY18 FY19 FY20 100 123 169 184 FY17 FY18 FY19 FY20

A

Frontline Productivity

Productivity in INR Lacs per month

1.4 1.6 1.6 1.6 FY17 FY18 FY19 FY20 45

9%

Max Life has a complete suite of products and focus is on selling longer term products along with improving penetration of pure protection offerings

Product Type Endowment ULIP Whole Life Money back Pure Term Guaranteed products Health Cancer Insurance Pension Annuity As on 31st Mar 2020

Average Average Average

36 25 16

Average Policy Term (Years) Average Policyholder Age (Years) Average PPT (Years)

22 14 64 17 35 19 19 29 23 57 11 10 51 16 34 9 19 29 23 1 35 38 36 27 35 43 39 38 34 63

Current portfolio1 biased towards traditional products Max Life has products across all categories

1 Health plan 1 Annuity plan 1 Retirement ULIP 4 Riders 1 Whole life 4 Protection plans 3 Income plans 3 Endowment plans 2 Child plans 3 ULIP plans

Retirement, 0.2% Endowment, 53.3% Guaranteed Products, 4.1% Money back, 2.3% Term, 11.5% Whole Life, 7.4% UL, 19.4% Cancer/ Health, 1.8% (1) Based on all policies sold till date

B

46

Focus on Protection: 49% increase in individual protection APE and 31% of total individual policies are pure protection

Figures in Rs. Cr. Figures in ‘000.

96 137 227 339 93 120 176 232 FY 17 FY18 FY19 FY20 Individual Group 78 114 175 183 FY 17 FY 18 FY 19 FY 20 Individual 189 403 256

Total APE (incl. Group credit life adjusted for 10% for single premium and term business)

B

No of Protection Policies (Individual)- limited growth in FY20 policies, protection growth led by introduction of limited pay Total APE (Individual + Group)

47

571

Strong focus towards customer measures has helped deliver superior performance across health parameters and will continue to remain an important priority

Surrender to GWP Persistency* Claims Paid Ratio- One of the best claims paid ratio in the industry Conservation Ratio

89% 90% 89% 85% FY'17 FY'18 FY'19 FY'20 97.81% 98.26% 98.74% 99.22% FY'17 FY'18 FY'19 FY'20 179 bps 141 bps

C

80% 70% 60% 55% 53% 80% 72% 62% 57% 53% 83% 71% 64% 58% 53% 83% 71% 63% 59% 52% 13th Month 25th Month 37th Month 49th Month 61st Month FY17 FY 18 FY19 11M FY20 290 70 320 420

• 90

XX

Change in persistency from FY17 to FY20 (in bps) *FY 20 persistency is reported for 11M as full year reporting accounts for grace period extension which may not be appropriate for comparison from last year Full year persistency disclosure as follows: 13th month-87%, 25th month-73%, 37th month-64%, 49th month-60%, 61th month-53%

48 21% 20% 19% 19% 2% FY17 FY18 FY19 FY20

2% due to UL discontinuance

49

Significant progress in driving adoption of digital assets & embedding intelligence across insurance value chain aiding in effectiveness and efficiency (1/2)

Digital Assets Embedded intelligence Impact

Recruitment Prospecting Fulfilment

▪ Psychometric based scoring and selection ▪ Predictive sales propensity models ▪ AI based pre-approved sum assured engines to generate customized offers for customers ▪ OCR for document parsing to enable real time identification and verification of documents to reduce discrepancies ▪ Upfront persistency risk model- integration with various Bureaus & external databases to identify risk of lapsation ▪ Fraud checks on customer photographs ▪ 100% Policies issued digitally ▪ 75% FTR ▪ 71% Insta issuance (1 day) Form filling, document collection and post sales verification in a seamless manner CSG/one CRM – Sales CRM tool for lead management Cross sell and up sell tool Products illustration generation tool End-to-end agent recruitment platform facilitating faster agent prospecting and onboarding ▪ 100% need analysis digitally ▪ 100% recruitment digitally Integration with Bank partners for customer data

D

50

Significant progress in driving adoption of digital assets & embedding intelligence across insurance value chain aiding in effectiveness and efficiency (2/2)

Digital Assets Embedded intelligence Impact

Underwriting Renewal Servicing

▪ Model to identify early mortality risk - highlights risky policies and reduces

• verall issuance time

▪ Integration with fraud database to identify and flag risky customers ▪ Automated Underwriting: 65% clear cases ▪ Propensity to lapse model using Deep Learning ▪ Early warning system to enable upfront persistency check ▪ 70% digital payments ▪ Email Bot for customer queries ▪ Linguistic speech analyzer to extract meaningful information from customer calls ▪ Smart Conversational IVR ▪ 80% digital self serve adoption ▪ > 50 lacs self service transactions ▪ 24X7 query resolution using chatbot Rule-based underwriting engine for policy issuance Customer Servicing tool Milli – chatbot for query resolution Whatsapp for customer query and servicing Self service options on website CRM system for One view of customer Multiple digital payment options Easy revival options on website Click to call and Robo call functionality Scheduled customer reminders

D

51

Max Life continues to drive technology transformation agenda in FY20 D

BUY FOR EFFICIENCY, BUILD FOR DIFFERENTIATION FLUID ARCHITECTURE COGNITIVE ENTERPRISE MODERNIZING LEGACY FY22 Target ▪ Migration to Open Source technology ▪ All applications to be on cloud ▪ Omni-channel enterprise ▪ Migration of all identified processes to in-house applications ▪ Phasing out of all proprietary business platforms to off the shelf packages ▪ AI enabled cognitive workflows across the value chain ▪ 360 degree view of customer ▪ Open source based analytics architecture Progress in FY 20 ▪ Moved to cloud native, modular architecture customer onboarding solutions ▪ Moving underwriting and New Business platform to modern scalable architecture ▪ Replacing proprietary UW platform with differentiated modular solution ▪ Building Intelligent lead management system for E- Comm fulfilment ▪ Internal AI Works teams aiding development of cognitive intelligence across Vision – Speech – Conversations in addition to multiple Deep Learning and Machine learning algorithms ▪ Building a modern Data Lake based Enterprise Data Architecture for scaling analytics ▪ 83% of business processes enabled through API ▪ Modernize all lines of business ▪ Adapt critical legacy systems to provide partners with the facilities and services the require

 Max Life Insurance – ESG

SECTION VII

ESG Framework: Setting benchmarks for inclusivity and sustainability

53

Replace ▪ End to end digital solutions for our business activities ▪ Live plants to improve air quality; 2,600 live plants placed in Head Office Reduce ▪ Energy reduction by using energy efficient cooling and lighting across branches ▪ Water conservation through sensor based taps and urinals; 100% water gets recycled in Head Office ▪ >1 lac water saving nozzles distributed ▪ Managed print services and stationery ▪ Food wastage awareness drive in Head Office; food wastage reduced to half Reuse & Recycle ▪ Waste management: segregation of waste ▪ E-waste disposal through certified vendors ▪ Saved 2 lacs paper cups in 6 months in Head Office by using ceramic cups Community Service ▪ Plantation Drive: >35,000 trees planted in FY20 across offices ▪ Joy of Giving: Provided sanitizers and masks to police officials during Covid 19 outbreak, provided soaps and ration to underprivileged families, blood donation and health check-up camps ▪ Financial Literacy: >5,400 employee volunteers; ~3 lac people connected Customers ▪ Digital enablers provide 24x7 service ▪ COVID-19: Un-interrupted service & claims Employees ▪ Diversity & Inclusion: 22% women employees overall, 31% women employees in non-distribution roles ▪ Employee health and wellbeing - flexi working hours, paid paternity leave, paid maternity leave, 100% Work from home Supervisory Board ▪ Diverse Board composition ▪ 30% Independent Directors ▪ Corporate Governance Policy; code of conduct policy ▪ Average board experience > 30 years Risk Management ▪ Risk management policy and enterprise risk management (ERM) framework ▪ Sensitivity analysis and stress testing - conducted periodically Compliance ▪ Information security and cyber security compliant with ISO guidelines ▪ Data privacy policy Ethical Practices ▪ Policies on AML, whistleblower, POSH, anti- bribery, corruption, gifts acceptance

Social Environmental Governance

 Max Life Insurance – MCEV Disclosures: FY’20

SECTION VIII

The Embedded Value1 (EV) as at 31st March 2020 (post allowing for the total shareholder dividend payout for FY20) is Rs 9,977 Cr. The Operating Return on EV (RoEV2) over FY20 is 20.3%. Including non-operating variances, the RoEV is 16.7%. The New Business Margin (NBM) for FY20 is 24.3% (before allowing for acquisition operating cost overrun) and 21.6% (post overrun), with Value

• f New Business (VNB) written over the period being Rs 897 Cr (post overrun).

Key Results

55

Notes:

1 Max Life’s Embedded Value (EV) is based on a market consistent methodology. However, they are not intended to be compliant with the MCEV Principles issued by the

Stitching CFO Forum Foundation (CFO Forum) or the Actuarial Practice Standard 10 (APS10) as issued by the Institute of Actuaries of India.

2 The Return on EV is calculated before capital movements during the year, example dividends.

Overview of the components of the EV as at 31st March 2020

Net worth and EV VIF

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

56

Present Value of Future Profits (PVFP) Rs 8,335 Cr Value of Inforce (VIF) Rs 7,432 Cr Time value of financial

• ptions and guarantees

Frictional cost Net Worth Rs 2,545 Cr Market value of Shareholders’

• wned assets over liabilities

EV Rs 9,977 Cr Cost of residual non- hedgeable risks

• 1. The deductions for risks to arrive at the VIF represent a reduction of ~11% in the PVFP. The largest deduction is in respect of CRNHR.
• 2. Within CRNHR, persistency risk constitutes the largest risk component.

TVFOG Rs 60 Cr CRNHR Rs 713 Cr FC Rs 130 Cr

Value of New Business and New Business Margins as at 31st March 2020

Note: Figures in Rs Cr.

57

▪ The New Business Margin (NBM) before cost overrun has increased by circa 180 bps to 24.3% for FY20 compared to 22.5% for FY19. ▪ The increase in margins (before cost overrun) is primarily driven by increase in proportion of non-par business. ▪ Post allowing for acquisition operating cost overrun chargeable to shareholders, the NBM reduces to 21.6% for FY20 compared to 21.7% for FY19.

1 Annual Premium Equivalent (APE) is calculated as 100% of regular premium + 10% of single premium. 2 The VNB is accumulated from the point of sale to the end of the reporting period (i.e. 31st March 2020), using the beginning of quarters’ risk free yield curve.

Description FY19 FY20 Y-o-Y growth

APE 1 3,950 4,149 5% New Business Margin (NBM) (before cost overrun) 22.5% 24.3% +180 bps New Business Margin (NBM) (post cost overrun) 21.7% 21.6%

• 10 bps

Value of New Business2 (VNB) (before cost overrun) 887 1,010 14% Value of New Business (VNB) (post cost overrun) 856 897 5%

EV movement analysis: March 2019 to March 2020

Figures in Rs Cr. 58

▪ Operating return on EV of 20.3% is mainly driven by new business growth and unwind. ▪ Non-operating variances are mainly driven by negative economic variance during the year. NAV 2,397 NAV 2,545 VIF 6,541 VIF 7,432 897 813 103 317 456 Opening EV Value of New Business Unwind Operating Variance Non-Operating Variance Dividend paid during the year Closing EV EV 8,938 EV 9,977

Operating RoEV: 20.3%

Value of New Business (VNB) and New Business Margin (NBM) Walk

59

21.7% 21.6%

• 2.0%
• 0.1%
• 1.9%

NBM -->

Figures in Rs Cr.

Sensitivity analysis as at 31st March 2020

Figures in Rs Cr. 60

• 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 under new business allow for the change in the value of assets as at the date of valuation.

Sensitivity EV New business Value (Rs Cr) % change VNB (Rs Cr) | NBM % change Base Case 9,977

• 897 | 21.6%
• Lapse/Surrender - 10% increase

9,854 (1%) 864 | 20.8% (4%) Lapse/Surrender - 10% decrease 10,103 1% 930 | 22.4% 4% Mortality - 10% increase 9,800 (2%) 852 | 20.5% (5%) Mortality - 10% decrease 10,154 2% 942 | 22.7% 5% Expenses - 10% increase 9,880 (1%) 831 | 20.0% (7%) Expenses - 10% decrease 10,073 1% 963 | 23.2% 7% Risk free rates - 1% increase 9,728 (2%) 911 | 22.0% 2% Risk free rates - 1% reduction 10,154 2% 847 |20.4% (6%) Equity values - 10% immediate rise 10,040 1% 897 | 21.6% Negligible Equity values - 10% immediate fall 9,914 (1%) 897 | 21.6% Negligible Corporate tax Rate - 2% increase 9,793 (2%) 871 | 21.0% (3%) Corporate tax Rate - 2% decrease 10,161 2% 923 | 22.3% 3% Corporate tax rate increased to 25% 8,762 (12%) 722 | 17.4% (20%)

ANNEXURES

Definitions of the EV and VNB

Market consistent methodology Covered Business Components of EV

63

▪ 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 methodology, an explicit allowance for the risks is made through the estimation of the Time Value of Financial Options and Guarantees (TVFOG), Cost of Residual Non-Hedgeable Risks (CRNHR) and Frictional Cost (FC) whereas for the traditional EV approach, the allowance for the risk is made through the Risk Discount Rate (RDR). The EV is calculated to be the sum of: ▪ Net Asset value (NAV) or Net Worth: It represents the market value of assets attributable to shareholders and is calculated as the adjusted net worth of the company (being the net shareholders’ funds as shown in the audited financial statements adjusted to allow for all shareholder assets on a market value basis, net of tax). ▪ Value of In-force (VIF): This component represents the Present Value of Future expected post-tax Profits (PVFP) attributable to shareholders from the in-force business as at the valuation date, after deducting allowances for TVFOG, CRNHR and FC. Thus, VIF = PVFP – TVFOG – CRNHR – FC. ▪ All business of Max Life is covered in the assessment except one-year renewable group term business and group fund business which are excluded due to their immateriality to the

• verall EV.

Components of VIF (1/2)

Cost of Residual Non-Hedgeable Risks (CRNHR) Present Value of Future Profits (PVFP)

64

▪ 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 covered business. ▪ PVFP for participating business is derived as the present value of shareholder transfers arising from the policyholder bonuses plus one-tenth of the present value of future transfers to the participating fund estate and one-tenth of the participating fund estate as at the valuation date. ▪ Appropriate allowance for mark-to-market adjustments to policyholders’ assets (net of tax) have been made in PVFP calculations to ensure that the market value of assets is taken into account. ▪ PVFP is also adjusted for the cost of derivative arrangements in place as at the valuation date. ▪ The CRNHR is calculated based on a cost of capital approach as the discounted value of an annual charge applied to the projected risk bearing capital for all non-hedgeable risks. ▪ The risk bearing capital has been calculated based on 99.5 percentile stress events for all non-hedgeable risks over a one-year time horizon. The cost of capital charge applied is 4% per annum. The approach adopted is approximate. ▪ The stress factors applied in calculating the projected risk capital in the future are based on the latest EU Solvency II directives recalibrated for Indian and Company specific conditions.

Components of VIF (2/2)

Time Value Of Options and Guarantees (TVFOG) Frictional Cost (FC)

65

▪ 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 products in both positive and negative scenarios, the TVFOG for these products is taken as zero. ▪ The cost associated with investment guarantees in the interest sensitive life non-participating products are allowed for in the PVFP calculation and hence an explicit TVFOG allowance has not been calculated. ▪ For all unit-linked products with investment guarantees, extra statutory reserves have been kept for which no release has been taken in PVFP and hence an explicit TVFOG allowance has not been calculated. ▪ The FC is calculated as the discounted value of tax on investment returns and dealing costs on assets backing the required capital over the lifetime of the in-force business. Required capital has been set at 170% of the Required Solvency Margin (RSM) which is the internal target level of capital, which is higher than the regulatory minimum requirement of 150%. ▪ While calculating the FC, the required capital for non-participating products is funded from the shareholders’ fund and is not lowered by other sources of funding available such as the excess capital in the participating business (i.e. participating fund estate).

Key Assumptions for the EV and VNB (1/2)

Economic Assumptions Demographic Assumptions

1 Financial Benchmark India Pvt. Ltd.

66

▪ The EV is calculated using risk free (government bond) spot rate yield curve taken from FBIL1 as at 31st March 2020. The VNB is calculated using the beginning of respective quarter’s risk free yield curve (i.e. 31st March 2019, 30th June 2019, 30th September 2019 and 31st December 2019 respectively). ▪ No allowance has been made for liquidity premium because of lack of credible information on liquidity spreads in the Indian market. ▪ Samples from 31st March 2020 and 31st March 2019 spot rate yield curves used are: The lapse and mortality assumptions are approved by Board committee and are set by product line and distribution channel on 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. Year 1 2 3 4 5 10 15 20 25 30 Mar 20 4.82% 5.16% 5.40% 5.72% 6.24% 6.95% 6.97% 6.81% 6.95% 6.68% Mar 19 6.43% 6.56% 6.66% 6.87% 6.99% 7.40% 7.83% 7.78% 7.73% 7.72% Change

• 1.61%
• 1.40%
• 1.26%
• 1.15%
• 0.75%
• 0.45%
• 0.86%
• 0.96%
• 0.78%
• 1.04%

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

• verrun 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 6.0% per annum. ▪ The commission rates are based on the actual commission payable, if any.

Tax

67

▪ The Corporate tax rate is the effective tax rate, post allowing for exemption available on dividend income. Tax rate is 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. ▪ Goods and Service tax is assumed to be 18%. ▪ The mark to market adjustments are also adjusted for tax.

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

Individual APE Renewal Premium Gross Premium FY 17

2,657 7,114

FY18

3,217 8,152 10,780 12,501

21% 15% 16%

Policyholder expense to GWP Ratio 12.9% 14.8%

187 bps

Expense to average AUM (Policyholder) 4.3% 3.6%

70 bps

Policyholder Cost to GWP Ratio 20.0% 23.5%

341 bps

3,917 9,415 14,575

22% 15% 17%

13.2%

34 bps

3.6% 20.0% FY19 Financial Performance

Note: Figures in Rs Cr.

68

4,116 10,600 16,184

14.5% 3.8% 20.8% FY20

5% 13% 11% 126 bps 80 bps 21 bps

Profit(before Tax) AUM New Business Margin (Post Overrun) FY 17 FY18 MCEV (pre dividend)^ Solvency Ratio Operating RoEV FY19 Financial Performance

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

Figures in Rs. Cr.

309%

768 615

275%

44,370 52,237

20% 18% Abs 34%

6,739

19.9% 20.6%

7,706

18.8% 20.2%

140 bps 70 bps 14%

623

242%

62,798

21.9%

9,257

21.7%

^Arrow represents growth in Operating RoEV

1% 20% 33% 150 bps 130 bps 22% 69

FY20

598

242%

68,471 10,433

9% 35% 10 bps 160 bps 20%

20.3% 207% 21.6%

4%

Performance update- Q4’FY20 and FY20

Key Business Drivers Unit Quarter Ended Q-o-Q Growth Year Ended Y-o-Y Growth Mar’19 Mar’20 FY19 FY20

a) Individual APE

• Rs. Crore

1,634 1,398

• 15%

3,917 4,116 5% b) Gross written premium income

• Rs. Crore

5,521 5,873 6% 14,575 16,184 11% First year premium 1,631 1,391

• 15%

3,873 4,088 6% Renewal premium 3,459 3,983 15% 9,415 10,600 13% Single premium 431 499 16% 1,287 1,495 16% c) Shareholder Profit (Pre Tax)^

• Rs. Crore

247 245

• 1%

623 598

• 4%

d) Policy Holder Expense to Gross Premium % 11.2% 11.4%

• 18 bps

13.2% 14.5%

• 126 bps

e) Conservation ratio % 86.6% 86.4%

• 18 bps

88.6% 84.7%

• 394 bps

f) Average case size(Agency) Rs. 57,873 70,415 22% 56,007 65,815 18% g) Share Capital

• Rs. Crore

1,919 1,919 0% h) Individual Policies in force

• No. Lacs

43.20 43.90 2% i) Sum insured in force

• Rs. Crore

703,972 913,660 30% j) Grievance Ratio Per Ten thousand 59 48

• 19%

70

^Profit declined from previous year due to increase in new business strain from higher NPAR (protection and savings), however offset to some extent by gains from introducing FRA and unwinding of IRS

71

Case size continues to expand across the board; Almost 50% growth in Protection Plans

85 88 96 49 53 59 11 13 19 114 139 156

FY18 FY19 FY20

Non PAR- Saving PAR Ind Protection ULIP 69 61 57

Case Size (INR’000)

30 40 84 296 307 224 114 175 183 121 123 106

FY18 FY19 FY20

Non PAR- Saving PAR Ind Protection ULIP 597 645 561

• 14%

NoPs (INR’000)