New Delhi, Delhi, India, 6th November 2019: MFS key subsidiary Max Life Insurance H1FY20 Financial Highlights
- Embedded Value grows to Rs. 9,745 Cr. grow 26% y-o-y; Operating Return on EV (annualised) at 18.3%
- Value of New Business grows 25% to Rs. 364 Cr.
- New Business Margin expands by 170 bps to 24.6%
- Individual adjusted sales grow 22% to Rs. 1,717 Cr.
Max Financial Services Limited (MFS) today announced its financial results for the quarter and half year ended September 30, 2019. MFS, the holding company of Max Life Insurance (Max Life), India’s largest non bank-owned life insurer, reported consolidated revenues of Rs. 8,635 Cr.[1] for H1FY20, growing 10% over the previous year. MFS PAT for the period was at Rs. 119 Cr., down 25% over the previous year due to shift in product mix towards Non-Participating (Non-PAR) products and investments in proprietary channels.
MFS’ sole operating subsidiary Max Life continued its strong performance in H1FY20, reporting revenues[2] of Rs. 8,216 Cr. growing 15%. The Value of New Business (VNB) written during H1FY20 is Rs. 364 Cr.[3], growing 25% over the previous year, as a result of shift in the product mix towards Non-PAR business while the New Business Margin was 24.6%[4]. The business also reported its Embedded Value (EV) based on market consistent methodology (MCEV) at Rs. 9,745 Cr., with an Operating Return on EV (annualised) at 18.3%.
Individual adjusted sales stood at Rs. 1,717 Cr., growing 22% over the past year, driven by growth in proprietary and bancassurance channels.
Max Life’s focus on proprietary channel continued to show stellar results. The channel’s sales grew 18% to Rs. 577 Cr. in H1FY20 and grew 22% to Rs. 349 Cr. in Q2FY20.
Max Life’s Assets under Management at Sep’19 end were Rs. 65,425 Cr., 17% higher than the previous year, led by growth of 19% in controlled fund and 12% in UL fund. Shareholders’ profit before tax was at Rs. 170 Cr., 39% lower than last year due to increase in Non-PAR business and investments in future growth Industry-wise, the Life Insurance industry grew by 11% in H1FY20 while the private life insurance sector grew by 16%.
Commenting on the financial performance, Mr. Mohit Talwar, Vice Chairman, Max Group & Managing Director, Max Financial Services, said, “Max Life has delivered on most of its financial parameters in H1FY20. Max Life outperformed the private industry growth by over 6% in the first half of the financial year. Going forward, our focus will be on strengthening the protection business, enhancing current products, successful execution of the agency excellence program with New York Life consultants as well as consistent business development efforts.”
Note to the Editor
The EV of a life insurance company comprises two key elements – a) Net Asset Value or the Net Worth of the company, which represents the market value of the company’s assets attributable to the shareholders, and b) the Present Value of the company’s future expected profits from its existing business portfolio as at the date of valuation.
Max Life had transitioned its EV calculation to a Market Consistent methodology from the earlier traditional approach (Traditional Embedded Value – TEV) in FY2015. This follows market practice in developed markets, where life insurers have moved to adopt market consistent methodologies.
A market consistent methodology approach better reflects the embedded value of an insurance company by explicitly and specifically allowing for insurance and economic risks rather than using an implicit overall allowance for risks through a Risk Discount Rate (RDR) in the traditional approach. In addition, the market-consistent approach is more objective where asset and liability cash flows are valued using assumptions consistent with those applied to similar cash flows in the capital markets, thus more accurately reflecting the health of the business.
