I am pleased to present this year’s Annual Report, which showcases one of Max Life’s best years in terms of financial performance since the Company’s inception.
Your Company remains one of the only two listed companies in the country giving investors pure access to the highgrowth life insurance sector.
It delivered strong financial growth with consolidated Revenues of ₹ 12,971 crore* and consolidated Net Profit** of ₹ 395 crore in FY 2017, growing 19% and 56%, respectively, over the previous year.
The Company’s sole operating business, Max Life reported a growth of 25% in Individual Adjusted Sales to ₹ 2,639 crore. Shareholders’ Profit Before Tax (PBT) totalled ₹ 768 crore, representing a significant jump of 50% on account of robust growth in revenues, higher realised investment income, and a favourable product mix.
It is not only a matter of pride for the Company but also a testimony to Max Life’s strong fundamentals and underlying strength that while having reached a stage of maturity, in FY 2017, the business delivered its strongest financial performance in 10 years.
Please allow me to share my perspective on a development that was constantly in the news through the year - MFS and Max Life’s planned merger with HDFC Life to create India’s biggest private life insurer. As you know by now, Max and HDFC Life recently made a mutual decision to call off the merger. After a long period of waiting, our original structure for the proposed merger was not approved by the Insurance Regulatory and Development Authority (IRDA) in June this year.
Despite the prospective partners being truly committed to the deal and observing a full year of exclusivity, it became apparent that any other structure for the deal would be sub-optimal for our stakeholders and the companies could not afford inordinate delays associated with finalisation and approval of these structures.
Our focus, going forward, will be to nurture Max Life, which is already a strong and robust business, and ensure robust growth through organic and inorganic measures. The Company remains confident of delivering superior value to all its stakeholders.
The outlook for Max Life and the Indian life insurance sector, in general, continues to be bright. The industry is entering a phase where growth opportunities are finally fructifying into reality. Low penetration of life insurance in India, a stable government at the Centre, healthy growth of the economy and changing demographics offer immense possibilities to grow the business. In addition, increasing awareness of the need for life protection, coupled with the propensity of Indians to save, are playing an ever more important role in promoting life insurance to Indian households.
The Government’s ‘demonetisation’ drive late last year is expected to curb black money, a development that could help shift savings from physical assets to financial instruments, resulting in a long-term growth trajectory for the life insurance industry as well. In fact, the positive impact of demonetisation became evident almost immediately, with an increased flow of money into formal channels including life insurance. Private life insurers especially were able to leverage higher customer walkins through their bancassurance channel.
Overall, the life insurance sector witnessed a growth of 21% in Individual Adjusted Premia in FY 2017, on account of a strong increase both in the private sector, which grew by 26%, as well as LIC, which posted a 15% growth. The robust performance of the private sector enabled it to increase its market share to 54%.
We look ahead, with high expectations on the way forward for Max Life. It is a mature business with steady income and profits and an outstanding top management. It has maintained its pole position of being the largest non-bank promoted private life insurance company and has the most balanced distribution mix with a gold standard agency force.
The Company has sharpened its expertise in building longterm bancassurance relations, with Axis Bank and Yes Bank being sterling showcases. Both these banks continue to be valuable bancassurance partners for us. In addition, with open architecture now allowed, we will be able to leverage our efficient bancassurance model to attract more banks and replicate our bancassurance success. At the same time, we recognise the need to grow owned channels such as Agency Distribution to reach out to a larger audience and sell diverse life insurance solutions.
I can, therefore, confidently say that Max Life is better positioned now than ever before for steady organic growth, while also possessing the potential, wherewithal, and appetite to grow inorganically. In the coming months, it will be our priority to optimise growth, while balancing market share and profitability.
In closing, let me thank you, our shareholders, for your ongoing support and trust as we look forward to delivering superior and enduring value in the future.
* Excludes Max Life Unit Investment Income
** Adjusted for minority interest
With good wishes,
Naina Lal Kidwai
Chairman, Max Financial Services Limited