Max Financial Services Limited (MFSL) announced financial results for the year 2020-21 (FY21). In FY21, MFSL reported consolidated revenues of Rs 31,288 Cr, 72% higher compared to the previous year due to gain on debt and equity portfolio. Excluding investment gains, its revenues grew by 17%. During the period under review, the company reported consolidated Profit after Tax of Rs 560 Cr, a jump of 105% compared to the previous year.
MAX LIFE INDIVIDUAL APE GROWS 19%, VALUE OF NEW BUSINESS AT RS 1,249 CR, GREW 39% TAKING THE EMBEDDED VALUE TO RS 11,834 CR
Max Life Results Highlights (FY21):
- Individual APE: Rs 4,907 Cr, Up 19%
- Gross Written Premium: Rs 19,018 Cr, Grew 18%
- Embedded Value at Rs 11,834 Cr; Operating RoEV at 18.59%, including non-operating variances RoEV at 22.4%, impacted by Covid-19 provisions.
- Value of New Business at Rs 1,249 Cr, grew 39%, almost doubled in 3 years.
- Total Assets Under Management (AUM): Rs 90,407 Cr, Grew 32%
The steep surge in the Profit After Tax was largely due to higher investment income, reversal of provision for impairment on financial assets, lower tax expense and a partial offset by new business strain due to shift in product mix towards non-par business.
During the financial year, total new business premium (individual and group) of Max Life increased 22% to Rs 6,826 Cr In terms of individual APE (Adjusted Premium Equivalent), it recorded a 19% growth to Rs 4,907 Cr Further, the renewal premium income (including group) grew 15% to Rs 12,192 Cr, taking gross written premium to Rs 19,018 Cr, an increase of 18% over the previous financial year.
MFSL’s sole operating subsidiary, Max Life, registered a post-tax shareholders’ profit of Rs 523 Cr in FY21 as compared to Rs 539 Cr in the previous financial year, a marginal decline of ~6%. The operating expenses (policyholders) to gross premium ratio marginally improved from 14.5% in FY20 to 14.2% in FY21 due to effective cost management efforts and higher business growth.
Max Life reported an Embedded Value (EV) of Rs. 11,834 Cr, after allowing for the shareholder dividends led by 39% growth in value of new business. The Operating Return on EV (RoEV) over FY2021 stood at 18.5%; including non-operating variances, the RoEV came to 22.4%, despite the impact of Covid-19 related provisions.
Prashant Tripathy, Managing Director & Chief Executive Officer, Max Life Insurance commented, “Our stellar performance in FY’21 is a milestone for the company. In a tough year, we outpaced the private life insurance industry on the back of exceptional digital agility, distribution excellence, and product innovation strength. A balanced product mix of traditional savings cum protection plans, unit-linked plans, and pure protection products has delivered robust sales growth and margin expansion, in turn enabling highest-ever overall sales and VNB. We are also proud of our relationship with Axis Bank reaching newer heights with the joint venture partnership and look forward to elevating and redefining the experience for our customers through seamless processes, differentiated products, and wider reach.”
“Our distribution network including e-commerce, bancassurance partners, and agency channels worked seamlessly during the pandemic to help customers realize their financial protection needs. We have been able to achieve the highest ever individual new business sum assured in FY’21 and a decade-high private market share of 10.8% in terms of Individual adjusted FYP. And while we remain committed to maintaining positive business momentum, our efforts are currently focused on providing support against Covid-19 to all our employees and advisors.” Prashant added.
The New Business Margin (NBM) for FY2021 was 25.2% (at actual costs), an increase of 360 bps and the Value of New Business (VNB) was Rs. 1,249 Cr (at actual costs), an annual growth of 39%. The higher growth in VNB was primarily on account of the relatively higher sales compared to last year, in addition to the higher margins driven by an increase in the non-par and protection products sales.
Max Life’s assets under management (AUM) was Rs 90,407 Cr as on March 31, 2021 – a rise of 32% over the previous year. Max Life’s Claim paid ratio at 99.35% at the end of FY21 is among the best in the industry.
Q4 FY2021 Performance
During the fourth quarter Q4FY21, MFSL registered consolidated revenues of Rs 9,760 Cr, up 129% from Rs 4,266 Cr in Q4FY20. Excluding investment gains, its revenues grew 21%. In the same period, the company’s Profit After Tax surged 949% to Rs 70 Cr from Rs 6.7 Cr in the year-ago period.
Max Life recorded a gross premium of Rs 7,106 Cr in Q4FY21, an increase of 21% from Rs 5,873 Cr in Q4FY20. Individual APE grew 35% in the quarter under review to Rs 1,893 Cr from Rs 1,398 Cr in the year-ago period.
Mr. Mohit Talwar, Managing Director, Max Financial Services, said, “The results are extremely encouraging, considering the challenging environment because of the pandemic. It’s one of our best performance in a decade.”
He added: “The conclusion of the deal where Axis Bank Limited, India’s third-largest private sector bank, became the co-promoter in Max Life with 12.99% stake will permanently address the uncertainty around Max Life’s distribution, and also strengthen its position.”