Dear Shareholders Greetings !
We have held the belief that Max Group's growth and progress have beenshaped to a significant extent by its very conscious and selective find of joint venture(JV) partners and the success of these JVs over the last three decades. As a result ourportfolio of JV partners is long and storied with names such as New York Life MitsuiSumitomo Insurance Bupa Plc Hutchison Telecommunications Gist-Brocades Motorola LifeHealthcare Toppan among others.
This year we have been fortunate to usher in another highly respectedname as a prospective JV partner. In April 2020 Max Financial Services Limited (MFSL)signed definitive agreements with Axis Bank India's third largest private bank to form aJoint Venture with MFSL's sole subsidiary Max Life Insurance Company (Max Life). In April2020 Max Financial Services Limited (MFSL) signed definitive agreements with Axis BankIndia's third largest private bank and its subsidiaries to form a Joint Venture withMFS' sole subsidiary Max Life Insurance Company (Max Life). The agreement was subsequentlymodified to allow Axis Bank and its subsidiaries to collectively acquire up to 19% stakein Max Life.
In strategic importance the proposed joint venture parallels ourpartnership at the dawn of the millennium in 2000 with New
York Life (NYL) America's largest mutual and most admired LifeInsurer. The JV with NYL and the Max Group helped build expertise in critical functionssuch as underwriting creation of a gold standard Agency distribution network etc. Thesevaluable skills helped Max New York Life (now Max Life) level the playing field versuslarge bank owned life insurers which were supported by their parent brands' and theirbranch network. The company went on to establish itself as one of India's most respectedlife insurance specialists that till today stands for need-based marketing financialstrength service excellence and fair dealings with the customer making it among themost trusted life insurers.
Our upcoming partnership with Axis Bank has been a natural culminationof a decade-long relationship. Like New York Life our JV with Axis Bank is well-timed andcrucial. Axis Bank is an exceptional partner with complementary skills a matching beliefsystem and a shared vision for the future of our life insurance business. In the pastthe two companies have provided long term saving and protection products to over 20 Lakhcustomers. The total premium generated through this relationship has aggregated to over '40000 Cr. Both Max Life and Axis Bank have also invested extensively in product andneed-based sales training thereby leading to consistent increase in productivity. ThisJV which we will treat as nothing short of an equal partnership is therefore an emphaticsignal that Max Life will become an even more formidable player in the Indian lifeinsurance space.
Another significant marker of this financial year was the onset of thenovel Coronavirus. With a global pandemic combined with lockdowns businesses were forcedto think of alternate ways to function as even the mightiest economies of the worldgrappled with major crisis such as dented healthcare infrastructure frozen supply andoperation chains layoffs among others.
At Max Group however we believe that difficult times show the truecharacter of individuals and organizations. The first management actions at Max Life weredirected towards the health and safety of employees and agent advisors. Our next objectiveduring this crisis was to retain the confidence of all our stakeholders by ensuring arapid shift to everything digital. Within days of a nationwide lockdown Max Life switchedto 100% digitization of all its customer and business facing activities through digitaltools online agent recruitment and training paperless onboarding and virtual salesoffice governance which not only helped the organization ride out this critical periodbut also outrank its peers in March 2020 the first month of the lockdown. As a result ofMax Life's digital dexterity and agility the company issued more than 24000 policies inMarch alone with an adjusted First Year Premium (FYP) of ' 163 Cr. since theannouncement of the lockdown.
With customer centricity at the core its 'Close to Customer' programensured proactive communication to reassure customers and enable digital modes ofservicing. In addition to establishing a digital sales ecosystem with a focus on'Protection for All' it invested in product innovations to capture emerging opportunitiesby creating a balanced product mix of traditional savings cum protection plans unitlinked plans and pure protection products. Max Life also achieved cost rationalizationduring these extraordinary times through multiple structural initiatives includingreimagining the futuristic operating model increasing business efficiencies investmentin profitable channel growth etc.
For the full financial year FY 20 Max Life delivered credible resultson most business parameters despite the challenging environment. Its gross premium of '16184 Cr. represents a growth of 11% vs previous year. The company reported aMarket-Consistent Embedded Value (MCEV) of ' 9977 Cr. with an Operating Return onEmbedded Value (RoEV) of 20.3%. The Value of New Business (VNB) written during FY 20 was '897 Cr. growing 5% over FY 19 and New Business Margin stood at 21.6% witnessing amarginal 10 bps reduction compared to the previous year. It also maintained its lead inthe industry with a Claims Paid Ratio of 99.22%.
Max Life's superior business practices won them multiple awards andrecognitions through the year but the one that we would like to share with you is MaxLife emerging as the only Insurer (Life General or Health) in the 'Top 100 Best Companiesto Work For' survey for India conducted jointly by the Great
Place to Work (GPTW) Institute and the Economic Times. Max Life was the24th best employer overall progressing 11 ranks from its last year's position.The recognition marked the fourth consecutive year of Max Life's representation beingranked one of top 50 companies in GPTW's best workplaces league table.
Max Life has carried over this momentum to the first quarter of FY 21.In June we ranked third amongst all private life insurers. The individual protectionpenetration saw a 105% increase in the first quarter implying that every second policysold was a protection policy. In the same period Individual New Business sum assured grewby 39%.
While it is no surprise that 2020 has been a harbinger of uncertaintiesand change it has also ushered in positive transformation on multiple aspects. With aglobal pandemic many are now cognizant of the need for protection products such as lifeinsurance. Equally importantly a highly digitized life insurance ecosystem can be thecatalyst to solve India's problem of insurance under-penetration and unravel thecumbersomeness associated with purchasing a life insurance policy.
In FY 21 MFSL's and Max Life's management actions will be focused onpreserving profitability while navigating changing consumer preferences and a protractedphase of economic revival in the country. These factors will not only drive new businessvolumes mix case size etc. but also policyholder lapse behavior which impacts bothin-force and new business profitability.
^Over the upcoming few years the proposed Axis Bank joint venture willprovide fillip to our next phase of growth. Axis Bank's financial muscle power know-howand bandwidth will significantly improve our positioning as compared to the competition.This joint venture while bringing immense value to customers also has the potential tocatapult Max Life further up on the life insurance league table. The combined legacy andtrust of the Max and Axis franchise will hold us in good stead especially in the currentscenario where people are seeking safety in well-governed and trusted institutions. J
If there is a lesson to be learnt from the present global crisis it isthat growth and resilience continue to be possible for those foreseeing landscape shiftsand acting swiftly to capitalize on them. It is our firm belief that despite the presentturmoil given Max Life's top quartile position in the sector and an agile strategybacked by strong execution muscle we will not only attain our business milestones butalso emerge as a stronger organization.
With all good wishes and gratitude for your support and confidence.
|Analjit Singh ||Mohit Talwar |
|Founder & Chairman ||Vice Chairman |