Earnings Call Transcript Analysis Report #
Financial Performance #
Key Financial Metrics (FY'25) #
- Max Financial Services Limited (MFSL) Consolidated:
- Revenue (excluding investment income): Rs. 32,620 crore (12% growth YoY).
- Consolidated PAT: Rs. 403 crore.
- Axis Max Life Insurance:
- Individual adjusted first-year premium growth: 20% (vs. private sector 15%, industry 10%).
- Individual adjusted first-year premium 2-year CAGR: 18% (vs. private sector 12%, industry 8%).
- Renewal Premiums: Rs. 21,049 crore (14% growth).
- Gross Premiums: Rs. 33,223 crore (13% growth).
- Value of New Business (VNB): Rs. 2,107 crore (7% growth YoY).
- New Business Margin (NBM): 24% (Q4 NBM: 28.1%).
- Embedded Value (EV) as of March 31, 2025: Rs. 25,192 crore.
- Annualized Total Return on EV: 29%.
- Annualized Operating RoEV: 19.1% (includes Rs. 5 crore positive operating variance).
- Policyholder OPEX to GWP: 13.6% (Policyholder OPEX growth: 11% for FY'25).
- Total Cost to GWP: 23.1%.
- Profit Before Tax (PBT) for 12 months FY'25: Rs. 448 crore (20% growth).
- Solvency: 201% (up from 172% last March), supported by Rs. 500 crore subordinate debt raised.
- Assets Under Management (AUM): ~Rs. 1.75 lakh crore (16% growth).
- Rider APE growth: 300%.
Comparison with Previous Periods #
- Individual adjusted first-year premium growth (20%) significantly outperformed the private sector (15%) and overall industry (10%) in FY'25.
- NBM for FY'25 was 24%, down 250 bps YoY, primarily due to a lower proportion of non-PAR and higher proposition of ULIPs in our product mix.
- Q4 NBM was 28.1%, marginally lower than last year’s margin of 28.6% despite having high ULIPs.
- Persistency: 13th-month regular pay premium persistency up ~100 bps to 87.6%; 25th-month persistency up 380 bps to ~74%.
Revised Guidance or Forecasts #
- FY'26 Growth: Aiming for at least 300-400 basis points upside versus private industry growth (estimated 13%-14%).
- FY'26 Margins: Targeting NBM in the range of 24%-25%.
Areas of Growth or Decline #
- Growth: Individual adjusted first-year premium, renewal premiums, gross premiums, VNB, PBT, AUM, Prop Channels (27% two-year growth), Protection business (35% in FY'25), Individual New Business Sum Assured (31%), Rider APE (300%). Strong growth in April FY'26 (close 24% as against private growth of around 2%).
- Decline: Overall NBM declined YoY due to product mix changes (higher ULIP). Case size for ULIP and Annuity declined in FY'25 (Annuity due to shift to regular premium, ULIP due to customer segment and e-commerce ticket sizes).
Strategic Initiatives & Business Updates #
Major Strategic Announcements #
- Mission ‘Uday’ (FY'26 Aspirations): On track to achieve targets related to online acquisition leadership, Prop Channel growth, Protection and Annuity leadership, and adding distribution partners.
- Rebranding to Axis Max Life Insurance: Positive impact observed across all vectors of awareness and consideration.
- Reverse Merger: Strong desire to proceed, awaiting regulatory clarity from the expected amendment to the Insurance Act, potentially in the monsoon session (August-September).
New Products, Services, or Markets Discussed #
- Product Innovation in FY'25: 80 product interventions (largely due to surrender guideline changes).
- STAR ULIP (Q4): Combines life coverage with market-linked returns, high sum assured multiples, flexible add-ons.
- Smart-Term Plan Plus (Q4): Features auto-rebalancing life cover, maternity benefits, lifeline plus option, 7 flexible variants.
- SEWA 2.0 (Q3): Flagship health product.
- Upcoming Product Innovation in FY'26:
- Smart Buy (Recently Launched): Non-PAR Savings Proposition with multiple premium payment terms, policy term combinations, early wealth/long-term income variants, flexible benefits.
- Market Expansion: Added 44 new partners across Retail and Group channels in FY'25. Focus on deeper penetration into Tier-2 and Tier-3 cities.
Significant Operational Changes #
- Digitization for Operational Efficiency:
- mSpace: Super app for frontline staff to streamline sales, access policy info, customer data, performance analytics. 90% adoption for supervisor roles, 100% for direct sales force in agency.
- WhatsApp Scheduled Callback: Led to a 100 bps increase in NPS.
- Core Systems Upgrade: Facilitating same-day claim settlements.
- mPulse Medical Vital Face Scan: Tool for health assessment for non-invasive underwriting, especially for NRI customers.
- AI for Underwriting: In-journey financial underwriting decision-making using CIBIL, PAYU, bank statements.
- Risk Analytics Engine (Shield, MediCheck, GoVern): Identified and mitigated potential claim risk exceeding Rs. 1,500 crores in FY'25.
- ELY People Engagement platform 14.04 (Gen AI powered): Proactive employee engagement, sentiment assessment, attrition prediction, personalized HR support.
- Improved Grievance Handling: GIR reduced to 38 in FY'25 from 44 in FY'24.
Ongoing or Completed Projects #
- Rebranding from Max Life to Axis Max Life Insurance (completed, positive initial results).
- Integration of new partners.
- Rollout of mSpace across all channels by end of the year.
Market & Competitive Landscape #
Insights about Industry Trends #
- FY'25 marked by “substantial product regulatory changes and market volatility.”
- Industry growth slowed in H2 FY'25. Private industry grew 21% in the first half and only about 8% or 9% in the second-half.
- Evolution in product sales: Increased focus on Protection, Annuities, and Riders.
- Banks focusing on deposit building, impacting life insurance sales through bancassurance.
Competitive Positioning Statements #
- Regained rank #4 for full year FY'25, achieved rank #3 for H2 FY'25 and Q4 FY'25. Fastest growth among the top 10 private insurers over the past 2 years.
- Prop Channels (2-year growth 27%) and e-commerce maintained leadership in Protection and Savings.
- Rank #3 in Protection business and Individual New Business Sum Assured.
- Rank #2 in customer satisfaction (Hansa Research syndicated NPS study) for the third consecutive year.
- Rank #3 in brand search queries.
- Industry leader in 25th-month persistency (top 2 across all cohorts, 9-month disclosure).
Market Challenges or Opportunities Mentioned #
- Challenges: Regulatory changes, market volatility, headwinds of open architecture in Bancassurance.
- Opportunities: Under-penetration of Protection. Deeper penetration into Tier-2 and Tier-3 cities. Evolving customer needs for value and unmet needs satisfaction.
Comments about Market Share or Positioning #
- Counter share at Axis Bank stable at ~66%; Yes Bank counter share ~54%.
- Axis Max Life’s market share on sum assured basis is “substantially high,” ranking as #3 player.
Risk Factors & Challenges #
Concerns or Challenges Acknowledged by Management #
- Impact of new surrender regulations on product design and margins (though largely mitigated for Q4).
- Higher proportion of ULIPs (44% vs 36% last year) impacting overall NBM.
- Slower growth in Bancassurance channel, including Axis Bank, though plans are in place to improve this.
- Base effect for high-growth channels like e-commerce.
Regulatory Issues Mentioned #
- New surrender regulations implemented, requiring significant product interventions.
- Ongoing “regulatory noise” around bancassurance.
- Awaiting Insurance Act amendment for clarity on reverse merger (Section 35 relief).
Statements about Market Uncertainties #
- Geopolitical developments continue to influence market dynamics, rising uncertainty around global conflicts and trade policies may impact growth across the sector.
- Market volatility affecting ULIP sales and product mix.
Forward-Looking Statements #
Outlook and Future Projections #
- Confident in remaining ahead of the industry and driving sustained value.
- Expectation to rebalance product mix in FY'26, reducing ULIP proportion and increasing traditional, especially non-PAR.
- Continued strong growth in the Protection segment.