MFSLNSEQ2 FY24October 31, 2023

Max Financial Services Limited

9,219words
13turns
0analyst exchanges
0executives
Key numbers — 40 extracted
6.5%
ax Life Insurance : 6M FY’24 Key Highlights Transaction Update Current Structure Max Promoter 6.5% Mitsui Sumitomo 21.9% Public 71.6% Proposed Structure (Post preferential issue of Max Life sha
21.9%
M FY’24 Key Highlights Transaction Update Current Structure Max Promoter 6.5% Mitsui Sumitomo 21.9% Public 71.6% Proposed Structure (Post preferential issue of Max Life shares to Axis) Mitsui Sum
71.6%
ghlights Transaction Update Current Structure Max Promoter 6.5% Mitsui Sumitomo 21.9% Public 71.6% Proposed Structure (Post preferential issue of Max Life shares to Axis) Mitsui Sumitomo 21.9% M
0.98%
to Axis) Mitsui Sumitomo 21.9% Max Promoter 6.5% Public 71.6% Final structure (Post exercise of 0.98% right by Axis) Max Promoter 6.5% Mitsui Sumitomo 21.9% Public 71.6% MFSL 87.0% Axis Group ~13%
87.0%
Post exercise of 0.98% right by Axis) Max Promoter 6.5% Mitsui Sumitomo 21.9% Public 71.6% MFSL 87.0% Axis Group ~13% MFSL 80.98% Axis Group* ~19.02% MFSL 80.0% Axis Group ~20.0% Max Life Max L
13%
98% right by Axis) Max Promoter 6.5% Mitsui Sumitomo 21.9% Public 71.6% MFSL 87.0% Axis Group ~13% MFSL 80.98% Axis Group* ~19.02% MFSL 80.0% Axis Group ~20.0% Max Life Max Life Max Life
80.98%
by Axis) Max Promoter 6.5% Mitsui Sumitomo 21.9% Public 71.6% MFSL 87.0% Axis Group ~13% MFSL 80.98% Axis Group* ~19.02% MFSL 80.0% Axis Group ~20.0% Max Life Max Life Max Life   Pursuan
19.02%
r 6.5% Mitsui Sumitomo 21.9% Public 71.6% MFSL 87.0% Axis Group ~13% MFSL 80.98% Axis Group* ~19.02% MFSL 80.0% Axis Group ~20.0% Max Life Max Life Max Life   Pursuant to the approval of
80.0%
i Sumitomo 21.9% Public 71.6% MFSL 87.0% Axis Group ~13% MFSL 80.98% Axis Group* ~19.02% MFSL 80.0% Axis Group ~20.0% Max Life Max Life Max Life   Pursuant to the approval of the MFSL and
20.0%
ublic 71.6% MFSL 87.0% Axis Group ~13% MFSL 80.98% Axis Group* ~19.02% MFSL 80.0% Axis Group ~20.0% Max Life Max Life Max Life   Pursuant to the approval of the MFSL and Max Life Boards an
Rs 1,612
val of the MFSL and Max Life Boards and subject to regulatory approvals, Axis Bank will be infusing Rs 1,612 Cr by subscribing to 14.26 Cr equity shares of Max Life, at fair market value ~ Rs 113.06 per shar
Rs 113.06
infusing Rs 1,612 Cr by subscribing to 14.26 Cr equity shares of Max Life, at fair market value ~ Rs 113.06 per share (determined basis DCF methodology). Upon completion of the Proposed Infusion, Axis entit
Guidance — 2 items
Financial literacy and insurance awareness
opening
“project continues in partnership with United Way Chennai and Haqdarshak in Haridwar and Purbi Singhbhum.”
The EV is calculated to be the sum of
opening
“Required capital has been set at 180% of the Required Solvency Margin (RSM) which is the internal target level of capital, which is higher than the regulatory minimum requirement of 150%.”
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Risks & concerns — 14 flagged
Investor Release 25 B Focus on retirement leading to >3x growth in Annuity business in H1FY’24 Life stage & Objective Age: 25-45 yrs Accumulate funds Age: 45-60 yrs Plan for retirement Age: 60+ yrs Cover the risk of living too long Needs  Tax Saving  Savings for future  Tax Saving  Lumpsum req.
— Sub
 Multi-tier governance and automation for highest impact areas  Quantified risk appetite for – Operational errors – Product set up errors  Comprehensive Vendor due diligence
— Preventive Programs
 Customized Incident Management program  Enterprise-wide tool for incident disclosures  Risk certifications for critical processes
— Detective Programs
Eagle Eye Go, CXO Dashboard  AI/ML – Speech to Text, Claims Risk Insight Engine.
— Corrective programs
Risk free rate sensitivities under new business allow for the change in the value of assets as at the date of valuation.
— Environment preservation
 For the market consistent methodology, an explicit allowance for the risks is made through the estimation of the Time Value of Financial Options and Guarantees (TVFOG), Cost of Residual Non-Hedgeable Risks (CRNHR) and Frictional Cost (FC) whereas for the traditional EV approach, the allowance for the risk is made through the Risk Discount Rate (RDR).
— Environment preservation
Investor Release 51 Components of VIF (1/2) Present Value of Future Profits (PVFP)  Best estimate cash flows are projected and discounted at risk free investment returns.
— The EV is calculated to be the sum of
Cost of Residual Non-Hedgeable Risks (CRNHR)  The CRNHR is calculated based on a cost of capital approach as the discounted value of an annual charge applied to the projected risk bearing capital for all non-hedgeable risks.
— The EV is calculated to be the sum of
 The risk bearing capital has been calculated based on 99.5 percentile stress events for all non-hedgeable risks over a one-year time horizon.
— The EV is calculated to be the sum of
 The stress factors applied in calculating the projected risk capital in the future are based on the latest EU Solvency II directives recalibrated for Indian and Company specific conditions.
— The EV is calculated to be the sum of
Investor Release 53 Key Assumptions for the EV and VNB (1/2) Economic Assumptions  The EV is calculated using risk free (government bond) spot rate yield curve taken from FBIL1 as at September 2023.
— The EV is calculated to be the sum of
The VNB is calculated using the beginning of respective quarter’s risk free yield curve (i.e.
— The EV is calculated to be the sum of
 Assumptions are based on last one year experience and expectations of future experience given the likely impact of current and proposed management actions on such assumptions.
— The EV is calculated to be the sum of
 Future CSR related expenses have been taken to be 2% of post tax (risk adjusted) profits emerging each year.
— The EV is calculated to be the sum of
Speaking time
Validation
3
Sub
1
Management Framework
1
Management
1
Business Continuity
1
Preventive Programs
1
Detective Programs
1
Corrective programs
1
Financial literacy and insurance awareness
1
Environment preservation
1
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Opening remarks
Sub
Investor Release– Q2 FY 24 Pursuant to Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we are enclosing Investor Release – Q2 FY24 being issued by the Company on the outcome of its Board meeting held on October 31, 2023. You are requested to kindly take the aforesaid on record. Thanking you, Yours faithfully for Max Financial Services Limited Piyush Soni Company Secretary & Compliance Officer Encl: As above Max Financial Performance Update Investor Release 6M FY24 October 31, 2023 *GPTW ranking as of 2021, company has not participated post 2021 SECTION I  Max Financial Services and Max Life Insurance : 6M FY’24 Key Highlights Transaction Update Current Structure Max Promoter 6.5% Mitsui Sumitomo 21.9% Public 71.6% Proposed Structure (Post preferential issue of Max Life shares to Axis) Mitsui Sumitomo 21.9% Max Promoter 6.5% Public 71.6% Final structure (Post exercise of 0.98% right by Axis) Max Promoter 6.5% Mitsui Sumitomo 21.9% Public 71.6%
Management Framework
 Cash flow and duration matching  Cash flow and duration matching  Comprehensive hedging program  Comprehensive hedging program  Natural hedge  Natural hedge  Limit on non-par sales  Limit on non-par sales  Active policyholder bonus  Active policyholder bonus management for Par business management for Par business Focused Product Focused Product
Management
 Repricing to align benefits with  Repricing to align benefits with current rates current rates  Variant and channel level  Variant and channel level granular monitoring granular monitoring
Validation
 Direct Board oversight  Direct Board oversight  Stress testing  Stress testing  Sensitivity tracking  Sensitivity tracking  Peer review of liabilities  Peer review of liabilities  Periodic external review of  Periodic external review of Derivatives Derivatives Front Office – Led by CIO:  Differential strategy as per the fund characteristics  Ensuing diversification and credit quality across portfolio, minimize credit and concentration risks Middle Office – Led by CRO:  Independent credit review of portfolio and all new investment proposals  Derivative risk management  Early Warning Framework  Consequence management of stressed assets Back Office – Led by CFO:  Ensuring implementation of cash flow matching requirement of ALM  Valuation, Collateral and Margin management of Derivatives  Appropriate provisioning for stressed assets Information Security and Business Continuity Risks  Cyber DARE framework for managing security goals:  Robust framework based on ISO 27001
Validation
 Dedicated CISO, internal security team and external security partner(s)  Independent external benchmarking (Bit Sight) to keep abreast with emerging security trends
Business Continuity
 Robust framework based on ISO 22301  Business continuity plans reviewed annually  Annual BCP drill  Alternate Disaster Recovery (DR site) and regular data backups with movement to DR site  Crisis Action Manual Operational Risks
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