Max Financial Services Limited Q3 Fy19 Earnings Conference Call Transcript

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Max Financial Services Limited Q3 FY19 Earnings

Conference Call Transcript

February 11, 2019

Moderator        Ladies and gentlemen, good day and welcome to the Max Financial Services Limited Q3 FY19 earnings conference call. As a reminder, all participants’ lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. I now hand the conference over to Mr. Mohit Talwar, Managing Director, Max Financial Services Limited. Thank you and over to you, sir.

Mohit Talwar        Thank you and good afternoon ladies and gentlemen. Welcome to this earnings call. I would like to introduce my colleagues, Prashant Tripathy, who is the MD and CEO of Max Life and Mr. Jatin Khanna who handles the Investor Relations for Max Financial Services. I will talk about the key highlights first for 9 months and then update on the strategic priorities as we have been doing in our previous calls.

Max Financial had a robust revenue growth of 16% and achieved 11,292 crore. Consolidated PBT at 253 crore is down 27% year-on-year due to the reasons which we had outlined in our earlier investor release. There were some one-off expenses relating to an acquisition, which we didn’t pursue and then there was truing up of the Axis Bank put option liability and there were some expenses relating to distribution expansion and change in product mix.

Moving onto Max Life, they have had a fantastic performance. Max Life’s MCEV on an operating basis has grown 18.8% to 8,254 crore. Structural NBM’s pre-cost overrun expands by 280 basis points to 22.8% and actual NBM’s post-cost overrun expands by 240 basis points to 220.4%. Full year ROEV and NBMs are expected to be better than the historical trends. Value of new business post overrun has grown 37% to 466 crore. Individual APE has grown at a strong 21% to 2,269 crore with increased contribution from protection products. Max Life has been outperforming the industry growth on new sales, individual by growing at 21% against the private market growth of only 11%. It has gained 65 basis points in its market share.

Strong momentum in sales growth continues in January too, where growth is even higher than 21%. Whereas we understand that some of the larger players have had a muted performance. Investment in proprietary channels led to a 30% growth in 9Mcontributing 33% of sales exceeding the Banca growth of 17%. This is in line with our aspiration to increase proprietary share to about 35% to 40%. To this effect, Max Life has entered into a strategic knowledge partnership with New York Life where ex-New York Life lenders will work with Max Life starting March to help drive further performance improvement in the proprietary channel. They will be leveraging best practices in the agency distribution channel via cobranded selling tools like training manuals and manual and digital literature. Continuing with our strong focus on digital, the e-commerce channel has grown 76%. Protection sales including individual and groups grew 65% year-on-year resulting in improvement in protection mix from 9% in the  9MFY18 to 12% in 9MFY19. Individual protection mix improved by 210 basis points to 6% in  9MFY19, which is best amongst the listed players. Group protection mix improved by 110 basis points to 5% in  9MFY19. Gross written premium has grown strong 15% to 954 crore, 14% growth in renewal premiums to 5,956 crore led by a record improvement in conservation ratio to 90%. 13-month persistency improved by 265 basis points to 84%. Max Life claims paid ratio at 98.26% in FY18 makes it the only private insurer to surpass market leader LIC. Assets under management as at December '18 end stood at 58,397 crore. This has grown 16% year-on-year. Max Life recognized as being amongst India’s best companies to work for in 2018. It is number one in life insurance, amongst the top 15 in BFSI and amongst the top 50 companies in India.