Max Life Insurance Financial Statement
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Statutory Report DIRECTORS’ REPORT Your Directors are pleased to present the Eighteenth Annual Report of your Company with the audited accounts for the Financial Year ended March 31, 2018. BUSINESS HIGHLIGHTS Highlights for the Financial Year (FY) ended March 31, 2018 are as under: (Rs. crore) Particulars Financial Year Financial Year Growth 2018 (Apr. 17 – Mar. 18) 2017 (Apr. 16 – Mar. 17) % Financial Performance New Business Premium (First Year Premium 4,349 3,666 19 and Single Premium) Adjusted Individual First Year Premium* 3,215 2,638 22 Renewal Premium 8,152 7,114 15 Commission Expenses 893 936 -5 Operating Expenses (Policyholders’) 1,612 1,591 1 Shareholders Profit / (Loss) After Tax 528 660 -20 Interim Dividend paid (Net of Dividend 163 140 16 Distribution Tax) Key Business Parameters Solvency Ratio 275% 309% -3400 bps Share Capital including Reserves and Surplus 2,689 2,506 7 Assets Under Management 52,237 44,370 18 No. of Policies In-Force (‘000s) 4,085 3,913 4 Sum Assured In-Force 5,11,541 3,77,572 35 No. of Employees 10,226 9,446 8 No. of Agents 54,791 54,283 1 No. of Offices 210 210 0 *Adjusted First Year Premium=Individual Regular First Year Premium plus 10% of Single Premium Indian Life Insurance industry witnessed high growth Amongst the private players, Max Life Insurance Co. in new business for a second year in a row. This growth Ltd. (“Max Life Insurance” or “your Company” or “Max strengthens the belief that consumer confidence Life”) maintained its 4th rank with a market share of 9.0% in financial savings is sustainable and life insurance amongst the private players and 5.1% at the industry industry is well placed to leverage that. level, including LIC. While the most anticipated merger between Max Life Insurance and HDFC Life was called New Business (Adjusted Individual First Year Premium) off due to regulatory reasons, more M&A opportunities recorded 19% growth for Indian Life Insurance industry opened up and are being pursued by your Company. in the Financial Year 2017-18 (FY18). During the year, 22 life insurers (including LIC) recorded double digit First Year Premium (Individual + Group) for Max Life growth of which 14 recorded more than 20% growth. Insurance increased by 19% to Rs.4,349 crore. In terms LIC recorded 13% growth, while private life insurers of individual adjusted first year premium, your Company recorded a growth of 24% resulting in an increase in recorded 22% growth to Rs.3,215 crore. market share of private life insurers to 56.2%. During the year, renewal premium income grew by FY18 will go down in the history of Indian life insurance 15% to Rs. 8,152 crore, taking gross written premium industry as a year for which significant corporate to Rs.12,501 crore, an increase of 15% over the previous actions took place. The industry witnessed two more financial year. private life insurers going for an Initial Public Offering which means that the investors now have opportunities Operational efficiency is key to reducing cost in your to participate in the success story of top four private life Company. The operating expenses (policyholders) to insurers through stock markets. net premium ratio improved from 14.9% in FY17 to 13% in FY18 and the cost (commission + policyholders 192/ Max Life Insurance Company Limited Registration No: 104; Date of Registration with IRDAI: November 15, 2000 ANNUAL REPORT2017-18 operating expenses) to net premium ratio improved Agency, Customer Advisory Team and e-commerce, from 23.7% FY17 to20.2% in FY18. form core of this distribution architecture. The Company decided to further strengthen these Your Company generated a post-tax shareholders profit channels and increase growth rate while continue of Rs.528 crore in FY18 as compared to Rs.660 crore to be leader on quality parameters. in the previous financial year, recording a decline of 7% mainly due to high investment profits and some • Stronger integration with bancassurance non-repeatable income recorded during the previous partners – Max Life Insurance enjoys long year. Your Company announced shareholders’ interim standing and most productive relationships with its dividend (net of Dividend Distribution Tax) of Rs 163 bancassurance partners. The focus on strengthening crore and the Board recommended a final dividend (net relationship with Axis Bank, Yes Bank and Lakshmi of Dividend Distribution Tax) of Rs.163.10 crore during Vilas Bank by integrating systems, better customer the year, which take the total dividend distribution to understanding and relevant solutions became even 17% of the face value of each share. more critical in open architecture. THE STATE OF INDIAN ECONOMY • Strengthening our digital and e-commerce During FY18, as per the estimates, Indian economy grew offering – Indian consumers are adopting digital at 6.6%. After witnessing slow growth in the first half, the technology at a fast pace and mobile internet economic growth picked up and in Q4 FY18 crossed 7% has completely changed content consumption GDP growth mark. Corporate results for FY18 declared significantly. This creates a new set of opening so far also indicate a positive growth in profitability for for life insurance industry. Max Life Insurance leading companies. This clearly indicate that the Indian decided to strengthen its presence in e-commerce economy has overcome slowdown witnessed due to and at the same time create a digitally equipped demonetisation and GST implementation. distribution force best suited to leverage the new ecosystem. Reserve Bank of India reduced the benchmark interest rate by 25 bps to 6% at the close of the financial year • Enhance Protection business – Protection is 2017-18 as compared to previous financial year. The core to life insurance business. Max Life Insurance stock market was in positive territory with BSE Sensex has and will continue proposed to strengthen its recording 11% growth to end the year at 32,968. With protection portfolio and increase the element of Lok Sabha elections just a year away, all eyes will be protection in all the product solutions. on economic announcements made by the Central Government. • Set industry benchmark on health parameters – Growth without quality of business is not THE STATE OF YOUR COMPANY’S AFFAIRS sustainable. Max Life Insurance has always kept this STRATEGISING FOR CONSISTENT AND PROFITABLE frame in mind while creating its growth strategy. GROWTH Leadership on all customer parameters was Strategy of any successful organisation is rooted in identified as key to a sustainable and profitable the environment it operates in. Indian Life Insurance growth. is operating in a dynamic environment impacted by Your Company is happy to report a strong overall resurgent global economy, growing urbanization, performance across various operational areas. increasing longevity and digital revolution. India is witnessing a significant change with a stable political STRENTHENING MULTI-CHANNEL DISTRIBUTION environment, government policies having clear ARCHITECTURE economic agenda and focus on promoting the habit In a country as diverse as India and with the potential of financial savings. In addition, Indian consumer is that is unmatched in the world, a multi-channel changing – living in present, positive expectations of distribution architecture is essential for any life insurance future but at the same time they have to fend for their company. Max Life Insurance realized this early in its own financial future and hence want their money to journey and created a balanced distribution mix. Over work harder to provide them financial freedom. the years, the Company has created one of the most With this backdrop, Max Life Insurance created its five- productive agency distribution channels, stable and pillar strategy for the Financial Year 2017-18. high-performing third party distribution relationships as well as leadership in e-commerce. The Company • Strengthening proprietary channels – Max Life has also shown the ability to constantly review, learn Insurance has a balanced multi-channel distribution and upgrade its distribution channels to maintain its architecture. Proprietary channels, which include leadership in the industry. 193 Statutory Report Proprietary Distribution Channels relationship in the Indian life insurance industry with both partners committed to provide superior Proprietary distribution channels have been core value to its customers. The company maintained its to the Company’s distribution architecture. Agency near complete dominance of life insurance counter Distribution, Customer Advisory Team and e-Commerce at Axis Bank. Branch activation and increased witnessed strong growth momentum and, at the same preference for ULIPs amongst high ticket customer time, further improved the quality of business. The segment aided the growth in new business. proprietary channels recorded a growth of 16% during the year. • YES Bank – Max Life relationship continued its strong growth performance during the year and • Agency Distribution – Agency Distribution is the retained its position of one of the fastest growing largest proprietary channel of Max Life Insurance bancassurance relationship in Indian life insurance and is considered the benchmark on quality of sector. Increased focus on affluent customers people and processes as well as the advice it resulted in greater share of ULIPs in product mix. offers to its customers. As a result, Max Life’s Your Company remained focused on customer agency distribution has one of the highest office parameters. As a result, 13th month persistency productivity levels in Indian Life Insurance industry. witnessed an increase. Your Company increased Recruitment of quality agent advisors was the key branch activation in YES Bank through a significant focus area for the channel during FY18 as this is increase in specified persons. an important vector for building a career agency model. The channel used digital outreach for • Other bancassurance relationships - Lakshmi agent recruitment and also reached out to existing Vilas Bank witnessed growth in new business in line customers for their interest in taking up life with management expectations and your Company insurance selling as a career.