Max Financial Services Limited (MFS) today announced its financial results for the first quarter of financial year 2019-20 (Q1 FY2020).
MFS, the holding company of Max Life Insurance (Max Life), India's largest non bank-owned life insurer, reported consolidated revenues of Rs 3,949 Cr, growing 11 per cent over the previous year. MFS' profit after tax was recorded at Rs 54 Cr, showing a growth of 65 per cent.
MFS' Board also approved a preferential issuance, which will allow Mitsui Sumitomo Insurance (MSI) to swap 19.98 per cent of its shareholding in Max Life with 21.45 per cent stake in MFS.
MSI is part of the world's 7th largest MS & AD Insurance Group Holding of Japan. Max Financial Services and MSI are 74:26 joint venture partners in India's fourth largest private Life Insurer Max Life Insurance Company.
The transaction will also provide MFS an option to purchase from MSI, its balance shareholding of 5.24 per cent of the equity share capital of Max Life for cash at a price of Rs 80.89 per share.
The transaction structure will involve MSI subscribing 7,35,51,029 shares of MFS having a par value of Rs. 2 each at a price of Rs 421.67 per share aggregating to 21.45 per cent of the paid-up equity share capital of the Company on the date of allotment of the aforesaid fresh shares. In consideration, MFS will receive 38,33,92,784 shares of Rs 10/- each from MSI at a price of Rs 80.89 per share translating into 19.98 per cent stake of MLIC. Pursuant to this, the equity stake held by MFS in Max Life will increase from 71.79 per cent to 91.77 per cent.
MFS' sole operating subsidiary Max Life continued its strong performance in Q1 FY2020, reporting revenues of Rs 3,544 Cr., growing 15 per cent. The business also reported its Embedded Value (EV) based on market consistent methodology (MCEV) at Rs 9,314 Cr, with an Operating Return on EV (RoEV) of 14.8 per cent. The Value of New Business (VNB) written during the quarter was Rs 134 Cr, growing 33 per cent over the previous year while the New Business Margin (NBM) expanded 150 bps to 24.9 per cent.
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Max Life's Assets under Management in Q1FY2020 were Rs 63,877 Cr, 18 per cent higher than the previous year. The Company's Individual APE grew 23 per cent over the last year to Rs 679 Cr.
Max Life's proprietary channel sales were recorded at Rs 228 Cr -a growth of 16 per cent over the previous year. The e-commerce sales were up 49 per cent, owing to growth in organic leads while the CAT channel recorded 42 per cent growth.
Max Life also initiated its Agency Excellence Program during the quarter, based on recommendations from former senior employees of New York Life, its erstwhile JV partner known for its gold standard in Agency channel.
"MSI has been valued partners since long, contributing through their participation in the Max Life Board. We are positive that they will continue to be equally engaged and helpful at the holding company level. We look forward to maintaining our fruitful relationship with them", said Mohit Talwar, Vice Chairman, Max Group and Managing Director, Max Financial Services.
"Max Life has not only flourished on all financial metrics but with Individual Sales Growth of 23 per cent, continues to perform in line with the robust private market growth. The performance in the first quarter of the fiscal has set a firm pace for our goal of achieving 25 per cent-25 per cent-25 per cent in Sales Growth, New Business Margin, and Return on Embedded Value respectively, over the next three years", he added
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