Letter to Shareholders
Dear Shareholders,
Greetings!
With the Sensex at a historic high, stable GDP growth, inflation under
control, a record number of people lifted out of multidimensional poverty... suddenly a
rainbow of positive news about the Indian economy is making the headlines in stark
contrast to the global economic scenario.
To begin with, the world economy has faced significant shocks in the
past three years, including the COVID-19 pandemic, the Russia-Ukraine conflict, and
monetary tightening by central banks to combat inflationary pressures and so on. However,
that hasn't derailed the Indian growth story post the inevitable Covid blip. As Capital
Group notes in its newsletter*, "Corporate confidence is high, the economy is
expanding at a decent clip and technological innovation is leading to new areas of
growth'!
The Prime Minister's long term game plan of developing infrastructure
and making India a manufacturing and export hub, powered by schemes like Skill India and
Make in India have started bearing fruit. Despite the temptation, the government has shown
admirable fiscal prudence. Further, the government has ushered in reforms like bringing
GST, simplifying labour code, introducing RERA, Bankruptcy code among slew of big-ticket
changes*. While introduction of UPI shows India's digital prowess, cleaning up of bank
books have helped in shoring up investors' confidence. The PLI scheme is set to be the
bulwark of a manufacturing upsurge in the country.
As foreign companies look for a 'China plus one' strategy, India has a
real chance of gaining prominence. The government is looking to cut compliance issues to
improve 'Ease of Doing Business' parameters making investing in India an attractive
proposition. India is currently the 5th largest economy in the world, and if Goldman Sachs
is to be believed, it is likely to become the 2nd largest economy in the next 50 years.
Thus, while the path to prosperity is long and arduous, the outlook is extremely
promising.
Ease of Doing Business parameters making investing in India an
attractive proposition. Obviously, several challenges remain in India's path of becoming a
5 trillion-dollar economy.
The life insurance industry in India has seen an increased focus on
protection and withdrawal planning, driven by heightened awareness among the middle class.
Insurance penetration is rising, and the sector benefits from government interventions,
favourable regulations, and partnerships. The industry has experienced growth in premium
and assets under management. Government schemes like Pradhan Mantri Suraksha Bima Yojana,
Pradhan Mantri Jeevan Jyoti Bima Yojana, and Pradhan Mantri Vaya Vandana Yojana have
contributed to the sector's growth. Yet, the industry also faces challenges particularly
due to recently imposed tax measures for the Life Insurance sector.
Turning more specifically to your company, I am delighted to inform
that during this financial year, Max Financial Services Limited (MFSL) has acquired the
remaining equity stake in Max Life previously held by MSI taking its stake to 87%. MFSL
reported consolidated revenues of '31,431 crore, grew 1% mainly due to lower investment
income, excluding investment income, consolidated revenues grew 13% in FY 2023.
Consolidated Profit after Tax (PAT) stood at '452 crore, grew 42% in FY 2023.
Max Life has consistently established a strong market presence since
its inception. Upon reflecting on the last 5 years, Max Life has achieved robust results
across all aspects of our business. Sales have grown at a CAGR of 13% surpassing the
industry average growth of 10%. Max Life new business premium (First Year Premium and
Single Premium) increased by 13% to '8,960 crore. Max Life renewal premium grew by 13% to
'16,382 crore, and gross premium grew by 13% to '25,342 crore. Max Life generated a
post-tax shareholders' profit of '435 crore in FY 2023, as compared to '387 crore in the
previous financial year, recording an increase of 12%. The net worth increased from '3,064
crore in FY 2022 to '3,505 crore in FY 2023, a growth of 11%. Max Life's assets under
management (AUM) were '1,22,857 crore as on March 31, 2023, a rise of 14% over the
previous year.
Max Life achieved the highest New Business Margin (NBM) of 31.2% in FY
2023, improved by 380 bps over corresponding previous period. Value of New Business (VNB)
grew at 28% to '1,949 crore in FY 2023. Max Life reported an Embedded Value of '16,263
crore, while the Operating Return on EV (RoEV) improved by 290 bps to 22.1% year-on-year.
Max Life has secured 4 new banca partnerships with DCB Bank, Tamilnad
Mercantile Bank, Ujjivan Small Finance Bank, Capital Small Finance Bank and 6 new renowned
Brokers in FY 2023.
Max Life Pension fund management (PFM) commenced operations in FY 2023,
AUM as at March 31, 2023 ~'143 crore and also obtained a point of presence (POP) license
will aid mobilization of NPS funds.
Max Life achieved the highest New Business Margin (NBM) of 31.2% in FY
2023, improved by 380 bps over corresponding previous period. Value of New Business (VNB)
grew at 28% to '1,949 crore in FY 2023. Max Life reported an Embedded Value of '16,263
crore, while the Operating Return on EV (RoEV) improved by 290 bps to 22.1% year-on-year.
Max Life prioritizes prompt and hassle-free settlement of death claims,
and its success is not only evident in the ability to effectively reach its customers, but
also the trust they have placed in the brand. This is exemplified by the claims paid ratio
of 99.51% at the end of FY 2023, which is the highest in the industry. Additionally,
according to the globally recognized NPS metric, over the past 4 years, Max Life's NPS has
improved by 17 points.
Max Life has also prioritized innovation in its product offerings to
customers. Among new product launches, the non-participating savings product, Smart Wealth
Advantage Guarantee (SWAG), achieved significant sales of '1,000 crore in a short period.
The introduction of the "Smart Fixed Return Digital" online savings product
contributed to increased online sales.
In FY 2023, Max Life received several prestigious recognitions and
awards. Max Life was recognized as one of the best BFSI brands by the Economic Times. It
also earned recognition for Excellence in Financial Reporting from the Institute of
Chartered Accountants for its annual report. Additionally, Max Life received the Celent
Model Insurance Award for 2023, acknowledging its digital initiatives in data analytics
and AI. The company was also honoured with the Excellence in driving distribution through
digital award at the FICCI Insurance Industry Awards in 2022. These accolades highlight
Max Life's commitment to excellence and innovation in the insurance industry.
India's insurance sector is growing rapidly and expected to become the
world's sixth largest by 2032. The life insurance segment is projected to have significant
growth, driven by increased awareness, regulatory developments, and digital adoption. Max
Life has a three-year business plan focused on sustainable and profitable growth, product
innovation, customer-centricity, digitization, and human capital.
In the coming years, digitization will remain the driving force in our
industry, and we anticipate an increased Foreign Direct Investment limit of 74%. Our
management will carefully assess the market landscape, analysing opportunities to redefine
our growth ambitions for sustained and profitable expansion.
We extend our sincere gratitude to each and every one of you for your
unwavering belief in our company and its vision. This appreciation extends to our
employees across the Group, our esteemed business partners, investors, government agencies
with whom we actively collaborate and receive support.
And finally our gratitude to Axis Bank our JV and Bancassurance
partners.
Analjit Singh
Founder & Chairman