Max India Limited Investor Presentation September 2015 www.maxindia.com BSE Scrip Code: 500271, NSE Ticker: MAX, Bloomberg: MAX:IN 1
Max Group Vision “To be the most admired corporate for service excellence” • Positive social impact • Culture of Service Sevabhav • Helpfulness • Mindfulness • Expertise • Entrepreneurship Excellence • Dependability • Business performance • Transparency • Respect Credibility • Integrity • Governance 2
Our Businesses Multi-business corporate Focused on people and service “ IN THE BUSINESS OF LIFE ” Life Insurance Healthcare Health Insurance Senior Living Protecting Life Caring for Life Enhancing Life 100% Owned; Continuing Care 74:26 JV* with Mitsui Equal JV^ with Life 74:26 JV with BUPA Retirement Community in Sumitomo; Healthcare, SA; Finance Plc, UK Dehradun Largest non bank lead 2,300 beds private life insurer Speciality Films Corporate Social Responsibility Clinical Research 100% owned; Niche high barrier polymer films & Leather Focus on healthcare, children and the Being divested Finishing Foils environment *Max India currently holds 72% in Max Life 3 ^Current holding in MHC is Max India-46%, Life Healthcare-46% and IFC-7.5%
A unique investment opportunity and a resilient business model INR 149 billion+ Revenues*… ~INR 130 billion MCap… 7 Mn Customers… 1 18,000 Employees… 52,000+^ Agents… 2,200+ Doctors… 2 Strong growth trajectory even in challenging times; a resilient & diversified business model 3 Steady revenue growth and cost rationalization leads to strong financial performance 4 Well established board governance….internationally acclaimed domain experts inducted 5 Diversified ownership…..marquee investor base 6 Superior brand recall with a proven track record of service excellence 7 Strong history of entrepreneurship and nurturing successful business partnerships Electronic Mobile Communication Plating Medical Life Pharma Component Telephony Services Chemicals Transcription Insurance COMSAT Hutchison ATOTECH *Total Revenue for FY15, 4 ^Across Life and Health Insurance
Growth potential recognized by the market…. high pedigree investor base Shareholding Pattern as on June 30, 2015 Others 8.8% Mutual Funds • Temasek Shareholding 12.0% • Fidelity Promoters Concentrated • Norges 40.5% • New York Life with Marquee • Comgest Investors • Reliance MF FII (Others) • ICICI Prudential MF 20.2% IFC 3.1% Goldman Sachs 15.5% Number of outstanding shares : 26.65 Cr. 5
Consistent track record of strong growth across businesses with the group turning strong profits Rs Cr. Rs Cr. Operating Revenue Trend FY 11 FY 12 FY 13 FY 14 FY15 12000 Operating 6,668 7,648 8,180 9,140 10,048 9000 Revenue Investment and 6000 1,223 914 2,444 2,543 4,829 10048 Other Income 9139 8180 7643 6668 3000 5574 Total Revenue 7,891 8,562 10,624 11,683 14,877 Profit / (Loss) 0 32 242 991* 274 512** FY10 FY11 FY12 FY 13 FY14 FY15 before Tax Profitability Trend FY 11 FY 12 FY 13 FY 14 FY 15 400 350 1,944 2,513 2,903 2,984 3,302 Net Worth 242 300 333 250 507 549 676 702 544 274 Loan Funds 200 150 197 100 1,017 1,256 1,361 1,495 867 Net Fixed Assets 50 0 32 -50 540 397 409 247 683 Treasury Corpus -100 -150 (86) FY10 FY11 FY12 FY 13 FY 14 FY 15 13,836 17,215 20,458 24,716 31,200 Life Ins. AUM * Investment & Other Income and PBT for FY13 includes income from stake sale in Max Life amounting to Rs. 802 Cr and Rs.794 Cr, respectively. However, PBT for FY13 has been appropriately adjusted in the chart to reflect proper trends ** Gain from stake sale in Max Healthcare to Life Healthcare of Rs. 286 Cr. included in FY15 revenue and Rs 256 Cr. included in EBITDA/ PBT . Expenses of Rs. Rs 77 Cr. carried forward to be charged over future projects of Antara recognized in the P&L as current focus is on ensuring the success of first project, however PBT in the chart has been adjusted for one-offs *** Max Healthcare consolidated on proportionate basis w.e.f. Nov 11, 2014, as it becomes a JV as opposed to a subsidiary earlier 6
Max India – Key Highlights • Considerable progress in the journey to bring structural clarity for shareholders: Scheme of Arrangement to split Max India into 3 verticals – Max Financial Services (Life Insurance); Max India (Healthcare, Health Insurance, Senior Living, Corporate Management Max India Services and others); and Max Ventures and Industries (Specialty Films) has received Shareholders, Creditors, SEBI, Stock Exchanges, Competition Commission and Lenders Second Petition to be heard by High Court on September 29, 2015 Basis the current progress, the effective date of demerger is likely to be in October • EV as at Mar 31, 2015 at Rs 5,232 Cr, after allowing for shareholder dividends of Rs. 240 Cr and share capital buy back of Rs 166 Cr in FY15 • RoEV for FY15 at 28.1% and operating RoEV at 22.3% Max Life • Value of New Business for FY15 at Rs. 460 Cr. and new business margin at 23.4% • Max Life wins many prestigious awards in 2015 for Agency and Bank distribution, Great Place To Work and Best Life Insurance Company • Acquires 77.9% stake in 340-bed (expandable to 540 beds) NCR based Hospital Max Healthcare through Primary Investment & Secondary Acquisition for Rs 260 Cr. • Documentation underway for resetting the JV to 51:49. Cash inflow of Rs. 186 Cr. assuming implementation by September 30, 2015 Max Bupa • 'Claims Service Leader of the Year' award for Health Insurance at the 5th Indian Insurance Awards 7
MAX LIFE INSURANCE COMPANY (Max Life) www.maxnewyorklife.com 8
Indian life insurance industry has evolved since the opening up of the sector in 2000 Phase 1 – Joyful Entry (2000-2003) Phase 2 –Expansion (2004-2008) Phase 3 – Discovering New Normal (2009 onwards) Global Financial crisis/ Bearish Indian Stock Market Entry of Private Players Equity Bull Run Frequent regulatory interventions Introduction of Bancassurance ULIP introduced by private players 4.6% 4.4% Individual FYP adjusted for Single Premium (`'000 Cr.) xx 4.1% 4.0% 4.0% Insurance penetration 3.4% 3.2% 3.1% 2.6% 2.5% 2.5% 2.3% 2.2% 55 53 50 48 47 47 45 41 40 48% 50% 43% 54% 63% 62% 62% LIC 51% 21 64% 16 14 12 12 10 66% Private 75% 85% 94% Players 98% 100% FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 Source: IRDA Max Life Insurance
Product structure has started evolving, Private industry is seen moving towards a balanced product mix Product Mix for top players in FY 2015 (as per market reports) ICICI Pru 13% 3% 84% 29% 44% HDFC Life ~ 23% 15% 62% 69% SBI 46% 6% 48% 89% Max Life 57% 15% 28% 71% 56% ~ Reliance Life 15% 70% 15% 31% Birla Sunlife 25% 38% 37% 11% FY 2007 FY 2011 FY 2014 FY 2015 Bajaj Allianz 23% 56% 21% Traditional ULIP Par Non Par ULIP K EY I NSIGHTS Improved performance of the capital markets has revived interest in ULIPs which was leveraged well by some of the top players to record high new sales growth (individual adjusted @10% SP) - ICICI Prudential (YoY: +41%), HDFC Life (YoY: +25%) and SBI Life (YoY: +11%) o While ICICI Prudential and SBI Life had a high UL share across channels, HDFC Life delivered growth driven by high UL share in their banca channel only Top agency led players like Reliance Life and Birla Sunlife continued to have a Traditional heavy portfolio Max Life’s UL share accounted for 28% of total portfolio as a result of increased customer demand 10 SOURCE: Market Intelligence & Internal Estimates | Public Disclosures
Max Life has distinct competitive strengths which will help succeed in the new era Strong Parentage Superior Customer Retention Joint Venture between Top quartile position among major private – Max India Ltd. (leading Indian multi- players in FY2015 in business corporate) – 13 M persistency at 79% – Mitsui Sumitomo Insurance Co. Ltd. (Member of MS&AD group which is – Conservation ratio at 82% amongst top 10 general insurers in the “Treating Customers Fairly" framework world) adopted to drive our customer centricity Strong management team with proven agenda execution capabilities Financially sound* Long term Savings and Protection Comprehensive product suite Capital Base of `2,127cr Long tenor products and young customers Solvency ratio of 435% (one of the highest) Product mix : Par 57%, Non-par 15%, ULIP Assets under management of `31,220 cr 28% Multi-channel Distribution model Quality & Business Excellence Highly efficient and productive agency ISO Certification, strong feedback channel with focus on quality of advice Best in class training capabilities within the processes & robust 6 sigma program industry Focus on Service excellence & Operational Bancassurance relationship with Axis Bank efficiency is benchmark in the industry *for the period H1 FY 2015
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