Max Life Insurance records a year of strong growth with 30% increase in the Value of New Business for FY19
New Delhi, May 29, 2019: Max Life Insurance Co. Ltd (“Max Life/ “Company”), one of the leading Indian life insurance company, recorded a year of strong consistent growth, outperforming the industry. The Company recorded Individual adjusted first year premium of Rs. 3,880 crore achieving growth of 21% in the Financial Year 2018-19 (FY19) as compared to industry growth of 9% resulting in 65 bps increase in private market share to 9.7%. During this period the Gross Written Premium of the company grew by 17% to Rs. 14,575 crore, the Company recorded Shareholder Profit (Post Tax) of Rs. 556 crore.
Max Life performed well on other key business parameters for FY19:
- New Business Premium (Individual + Group) at Rs. 5,160 crore, recorded growth of 19%
- Assets Under Management (AUM) at Rs. 62,798 crore witnessed a growth of 20%
- Sum assured in force grew by 38% to Rs. 7,03,972 crore
- Solvency Ratio of 242%, significantly higher than the regulatory requirement of 150%, indicating the Company’s strong and stable financial position
- Claims paid ratio grew to 98.74% in FY19, up 48 bps from 98.26% in FY18
- 13th month persistency grew by 300 bps to 83% and 61st month persistency was maintained at 53%
Commenting on the performance of the Company, Mr. Prashant Tripathy, Managing Director & CEO, Max Life said, “In the backdrop of a formalized economy that rendered savings and investment patterns more structured, Max Life Insurance saw a year of strong and consistent growth with robust financial performance across all parameters in FY19. The year saw a significant increase in not only case size but also number of lives that we covered, recording a notable growth in new business. After setting an industry benchmark in ‘Claims Paid Ratio’ in FY18, we further improved this to 98.74% this year.
Through the year, we made significant investments to support future growth, enabling the proprietary channel to grow by 29% through the year. To further strengthen our agency distribution, we entered into a knowledge partnership with former executives of New York Life, to share insights and best practices to further improve Max Life’s efficiency in agency distribution.
Our strong business performance also manifested in superior returns for both our policyholders and shareholders in form of investment return in ULIPs fund and dividend, respectively. At Max Life, we look forward to sustaining our commitment towards building a financially protected nation, by addressing the diverse financial needs of our customers and engaging in a manner that results in greater outcomes.”
| Key Business Drivers | Unit | Year Ended | Y-o-Y Growth | |
| Mar 19 | Mar 18 | |||
| a) Individual Adjusted Premium | Rs. cr. | 3,880 | 3,215 | 21% |
| b) Gross Written Premium Income | Rs. cr. | 14,575 | 12,501 | 17% |
| New Business Premium (Individual + Group) | Rs. cr. | 5,160 | 4,349 | 19% |
| Renewal Premium | Rs. cr. | 9,415 | 8,152 | 15% |
| c) Cost to Net Premium Ratio | Rs. cr. | 20.2% | 20.2% | – |
| d) Shareholder Profit (Post Tax) | Rs. cr. | 556 | 528 | 5% |
| e) Share Capital including reserves and surplus | Rs. cr. | 2,767 | 2,689 | 3% |
| f) 13th month persistency | % | 83% | 80% | 300 bps |
| g) 61st month persistency | % | 53% | 53% | – |
| h) Individual Policies in force | No. Lacs | 43.20 | 40.85 | 6% |
| j) Sum Assured in force | Rs. cr. | 7,03,972 | 5,11,541 | 38% |
| k) Assets Under Management | Rs. cr. | 62,798 | 52,237 | 20% |
| l) Embedded Value | Rs cr. | 8,938 | 7,509 | 19% |
| m) Return on EV (RoEV) | % | 27% | 20.6% | 640 bps |
| n) Margin | % | 21.7% | 20.2% | 150 bps |
*Embedded value post final shareholder dividend
FY 2018-19 (April 2018 – March 2019) compared with FY 2017-18 (April 2017 – March 2018)
Gross Written Premium
The ‘Gross Written Premium’ for FY19 increased by 17% to Rs. 14,575 crore with 19% increase in new business premium to Rs. 5,160 crore and the renewal premium recording a growth of 15% to Rs. 9,415 crore. The adjusted individual first year premium increased by 21% to Rs. 3,880 crore and grew market share by 65 bps to 9.7% amongst the private players. A growth of 6% in the number of policies has been recorded, taking it to 43.20 lakhs for FY19, in comparison to 40.85 lakhs in FY18. The growth in proprietary channel of 29% during the year and thus increased its share in adjusted individual first year premium from 26% in FY18 to 28% in FY19 was a significant driver of overall growth. In addition to this, the Company’s strong relationships with bancassurance partners have been further strengthened through the year, increasing overall growth.
Cost Management
The Company continued to remain focused on providing greater value to its policyholders through improvement in efficiency. Cost (commission plus policyholders operating expenses) to gross premium ratio remained stable 20.2% despite significant investments in distribution expansion resulting in higher costs during the year.
Shareholders’ Profit After Tax (PAT)
During the FY 2018-19, Max Life Insurance, recorded a shareholders’ Net Profit After Tax of Rs. 556 crore, compared to Rs 528 Cr.
Final shareholders’ dividend (net of Dividend Distribution Tax) of Rs. 265 crore has been proposed by the Board of Directors, which takes the total dividend distribution to Rs. 499 crore translating to 14% of the face value of each share.
Policyholder Bonus
Considering the surplus that arose over the financial year in the participating fund, Max Life announced policyholder bonus. The total bonus estimated to be paid out in the 12 months in financial year 2019–20 is Rs. 1,222 crore.
Assets Under Management
The Company’s AUM of Rs. 62,798 crore recorded a growth of 20% over the last year. As on March 31, 2019 Rs. 42,936 of the AUM was in controlled fund and Rs. 19,862 in ULIP funds.
Embedded Value
The Embedded Value (EV), post final shareholder dividend, as at 31st March 2019 is Rs 8,938 Cr. The total RoEV for the year grew to 27%, driven by new business growth and healthy experience on persistency & mortality.
Customer Parameters
Customer retention is the best proof of not just selling right product solutions but also the quality of service a company provides to its customers which leads to better engagement. The 13th month persistency has been 83% with an improvement of 300 bps. The 61st month persistency has been 53 % this year. The surrender to Gross Written Premium ratio has also improved from 20.47% in FY18 to 19.04% in FY19.
Payment of death claim is the biggest moment of truth in a life insurance policy. Max Life continued its growth journey on that front with ‘Claim Paid Ratio’ improving to 98.74% for FY19. The Company paid death claims worth Rs. 452 crore during the financial year 2018-19
