EXECUTIVE

PRESIDENT’S LETTER

Dear Shareholders,


In recognition of the strength of Max Life’s business and MFS’s unique position as a listed entity operating solely in the life insurance sector, HDFC Life had approached Max with a proposition to merge Max Financial Services, Max Life and HDFC Life. Undoubtedly, such a merger would have leveraged the highly complementary strengths of each entity, bringing all-round benefits to customers, eployees and investors.


For most of the last year, we were engaged in the process of attempting to create the country’s largest private life insurance company with the proposed merger.

However, that proposal was not accepted by the Insurance regulator on the basis that the proposal did not satisfy the conditions of Section 35 of the Insurance Act. Since approval for the proposal was taking inordinate time despite committed efforts from the prospective partners, we recently decided to call off the merger to re-establish certainty amongst policyholders, staff and the broader market.

The merger proposition is a testimony to the reputation that Max Life has built for being a well-run, well-managed company with strong fundamentals, high level of governance and ethics, motivated and capable employees, led by a high-calibre leadership team, a customer-first orientation, an attractive product portfolio marketed through a balanced distribution network and strong brand equity.

The decision to call off the merger, therefore, does not deter us in the slightest way from continuing our profitable growth journey. Max Life will aggressively keep pursuing growth through investments in its own channels such as agency and digital, enhancing policyholder experience, leveraging bancassurance partnerships and forging new distribution alliances. In addition, in a market with more than 20 players, the opportunities from consolidation are inevitable and we will continue to pursue such opportunities as the industry consolidates further.

STRONG FINANCIAL PERFORMANCE

Speaking of strong fundamentals, allow me now to share a brief overview of what has been one of the best years in Max Life’s financial history since its inception.

Apart from reporting robust revenue growth of 19% and a stellar 50% increase in Shareholders’ Profit Before Tax (PBT), Max Life witnessed remarkable improvements in its key health metrics such as Embedded Value (EV), Value of New Business (VNB) and New Business Margin (NBM).

Max Life’s Embedded Value stood at ₹ 6,590 crore as of 31st March, 2017, with a Return on Embedded Value (RoEV) of 20%. The Value of New Business (VNB) written during FY 2017 was ₹ 499 crore, growing 29% over the previous year, and the New Business Margin stood at 18.8%.

Max Life’s Assets Under Management (AUM) stood at ₹ 44,370 crore as of 31st March, 2017, increasing by 24% over the last year. I am pleased to share that the performance of both traditional and unit-linked funds have been commensurate with the risks assumed in the respective funds, and overall, the funds outperformed the benchmarks during the year.

Max Life achieved a record high conservation ratio of 88% in FY 2017, compared to 86% in the previous year, clearly demonstrating the business’ customer-centric focus. The renewal income touched ₹ 7,114 crore, growing 12%. While the 13th-month persistency showed some improvement, more remarkable was the 10 percentage point jump in the 61st-month persistency to 53%. This growth is a clear reflection of Max Life’s steadfast commitment towards ensuring quality and achieving business excellence without compromising on its core policy of ‘Treating Customers Fairly’.

29% growth in Value of New Business in FY 2017

The holding company, Max Financial Services, reported 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.

I would like to take a moment to congratulate the leadership, management, and employees of Max Life, whose efforts continued to garner multiple external accolades for the company during the year. Some of the awards won by Max Life in FY 2017 and during the last few months include:

  • ET Best BFSI Brand Award for 2016
  • Asia’s Most Admired Brand by White Page International
  • ASQ 2017 Bronze Award as well as two Certificates of Recognition for various projects
  • Ranked 46th in Best Companies to Work For by ET and Great Places to Work and best amongst life insurance companies
  • Golden Peacock Award 2016, for excellence in Corporate Governance
  • Celent Model Insurer Award in the Asia-Pacific Region
  • Celent Asia Award for Best Technology Insurer
  • World Finance Global Insurance Awards - Winner for India

These are just a few reminders of the all-round success that Max Life has achieved in the last few years.

OUTLOOK

As we prepare ourselves for a somewhat different future from the one we envisaged last year, we must acknowledge and leverage our existing strengths in the form of a robust business that has continued to differentiate itself time and again in an otherwise cluttered market.

The industry environment is also more positive now, and the general sentiment across the economy is better under the current government. Against this backdrop, Max Life is very well capitalised and is poised to take advantage of consolidation opportunities in the life insurance industry landscape in India.


In FY 2017, Max Life notched a significant growth of 87% in its e-commerce business in the past year, acquiring nearly a fifth of its new customers through its ‘Direct-Digital’ channel. Behind this success is the exceptional digital eco-system that Max Life has created, to help navigate its customers effortlessly in each step of their decision-making journey while buying insurance online. As a result, the Company’s customer experience ranks among the best in the industry, as does its claims promise. In the coming months, we will invest significant time and resources towards progressing the business’ digitisation agenda and achieving significant improvements not only in the customers’ journey but also in deploying digital assets to make internal processes simpler, more efficient and paperless for our employees as well as our agents and bancassurance partners.

Over the years, Max Life has cemented its reputation as a benchmark for the life insurance industry in India across several dimensions including market-leading sales, a high-performing agency channel, enviable relationships with distribution partners such as Axis Bank and Yes Bank, strong and tenured management, focus on long-term savings and protection products and superior management of costs. The industry environment is also more positive now, and the general sentiment across the economy is better under the current government. Against this backdrop, Max Life is very well capitalised and is poised to take advantage of consolidation opportunities in the life insurance industry landscape in India.

I am confident that Max Life will continue to scale new peaks across key dimensions. At the same time, no vision can come to fruition without a bedrock of core values which each stakeholder must live by, in letter and spirit. It is this foundation that drives us to seek continual improvement in service excellence and to be the best-in-class for quality, care, and ethics and makes us the preferred life insurance partner for our customers.

I am deeply thankful to our nearly 10,000 employees and more than 50,000 agents across the country who have helped us realise this vision every single day for the last 17 years.

With warm regards and best wishes

Rahul Khosla

Executive President, Max Financial Services Limited

Chairman, Max Life Insurance