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    Max Financial

    MFSL
    Financial Services·8 Aug 2025
    Management Summary

    Max Financial Services Limited reported a strong Q1 FY26, with individual adjusted first-year premium growing 23% and VNB increasing 32% to INR 335 crore, driven by product mix rebalancing and margin expansion to 20.1%. While consolidated profit after tax was INR 86 crore due to new business strains, the company demonstrated robust growth across key metrics, improved customer service, and advanced digital adoption, maintaining a positive outlook for FY26.

    Highlights

    5

    • Individual adjusted first-year premium grew by 23%, nearly 3x the private sector growth of 8% and 4x the overall industry growth of 5%.

    • Value of New Business (VNB) grew by 32% to INR 335 crore for Q1 FY26.

    • Net Business Margin (NBM) expanded from 17.5% in Q1 FY25 to 20.1% in Q1 FY26.

    • Individual death claim paid ratio achieved a highest-ever 99.7% in FY25.

    • eKYC adoption increased from 35% to 70%, significantly reducing manual efforts.

    Concerns

    3

    • Consolidated profit after tax was INR 86 crore, largely impacted by strains from strong new business sales momentum.

    • 13th-month persistency saw a slight dip to 86% compared to 87% in Q1 FY25, attributed to economic effects and reduced high-ticket sizes.

    • Online APE remained flat, contributing to a divergence between adjusted FYP and APE growth, though this gap is expected to narrow.

    Key financials

    Metrics

    14

    Periods

    2

    Headline

    13
    • Individual Adjusted First-Year Premium Growth
      23%
    • APE Growth
      15%
    • MFSL Revenue (excl. investment income)
      ₹6,194 Cr
      YoY+18%
    • Consolidated PAT
      ₹86 Cr
    • Renewal Premium
      ₹3,873 Cr
      YoY+17%

    FY25

    1
    • Individual Death Claim Paid Ratio
      99.7%

    Segment breakdown

    Proprietary Channels
    18% APE Growth
    Bancassurance Channels
    16% APE Growth
    Axis Bank
    11% APE Growth
    Other Banca Partners
    54% APE Growth
    Protection Segment
    36% Growth
    Pure Protection Portfolio
    26% Growth
    Annuities and Strategic Focus Area
    40% Growth
    List

    Capital allocation

    2
    medium confidence
    CategoryHeadline
    M&A

    Axis Bank 1% stake

    acquisition · pending regulatory · Consideration ₹NaN (undisclosed)

    Liquidity

    Liquidity disclosed

    Solvency at the end of this quarter stands at 199%.

    Guidance & targets

    5
    CategoryTargetPriority
    Margin
    Net Business Margin (NBM)
    24-25%
    		High
    Growth
    Adjusted FYP vs APE growth delta
    2-4%
    		High
    Operational Efficiency
    Customer service volumes automated by Gen AI bot
    30%
    		High
    Operational Efficiency
    Headcount optimization by Gen AI bot
    20%
    		High
    Product
    Return on Premium (ROP) levels
    Improvement from 10%
    		Medium

    AFYP vs APE growth gap

    Next quarter
    Current23% (AFYP) vs 15% (APE)
    TargetNarrowing to 2-4%

    Why it matters

    Indicates stabilization of product mix and e-commerce channel performance, impacting reported premium growth metrics.

    I must state that it's going to plateau, and I don't expect a delta of more than 2% to 4% between the adjusted FYP and APE numbers going forward⏳.

    How to verify

    key_financials.metrics[label='APE Growth']

    Risks & concerns

    3
    RiskSeverity

    Impact of new business strains on profitability

    Consolidated profit after tax was INR 86 crore, largely impacted due to strains because of strong new business sales momentum. — Management acknowledged

    medium

    Divergence between AFYP and APE growth

    The gap between AFYP and APE is due to online business moderation and ULIP demand volatility, but is expected to narrow to 2-4%. — Analyst acknowledged

    low

    Weakness in 13-month persistency

    13th-month persistency declined slightly to 86%, attributed to overall economic effects and reduced high-ticket sizes, though collection efforts are improving. — Analyst acknowledged

    medium

    Q&A highlights

    8

    “The difference between the methods is in the annualized premium equivalent. You recognize the entire premium of a policy for the first 12 months in the first instance itself, whereas in the AFYP, it is actually basis the collection that is received on a month-to-month basis... The gap has come because of the fact that overall, the online business, especially on the savings side, has seen a moderation in momentum, largely due to the volatility in markets, which has impacted a little bit of ULIP demand during the quarter. And that's why the mobilization of APE in e-commerce is slower.”

    Clarifies the discrepancy in reported premium growth metrics, attributing it to product mix (ULIP moderation) and channel (e-commerce monthly modes), with an expectation for the gap to narrow.

    asked by Shreya Shivani

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Q1 FY26 Performance and Growth Drivers

    Max Financial Services Limited reported a robust start to FY26, with individual adjusted first-year premium growing by 23%, significantly outperforming the private sector (8%) and overall industry (5%). Annualized Premium Equivalent (APE) grew 15%, driven by both proprietary and bancassurance channels. Proprietary channels demonstrated 18% APE growth, while bancassurance grew 16%, with other banca partners showing a massive 54% growth. The company added 15 new partners during the quarter, strengthening its distribution network.

    02

    Product Mix Rebalancing and Margin Expansion

    The company successfully rebalanced its product mix, reducing the share of ULIPs from 43% in Q1 FY25 to 36% in Q1 FY26, partly due to the launch of the innovative Smart VIBE product. This shift, combined with a surge of over 300% in rider APE and strong growth in protection (36%) and annuities (40%), led to a significant margin expansion. The Net Business Margin (NBM) improved from 17.5% in Q1 FY25 to 20.1% in Q1 FY26, resulting in an impressive 32% growth in Value of New Business (VNB) to INR 335 crore.

    03

    Customer-Centricity and Digital Transformation

    Max Life achieved its highest-ever individual death claim paid ratio of 99.7% in FY25, demonstrating strong customer trust. The company maintained leadership in 13th-month persistency and secured the second position for 25th and 37th-month persistency. Digital initiatives are a key focus, with eKYC adoption increasing from 35% to 70% and the launch of the Axis Max Life app. A Gen AI-powered email bot is expected to automate 30% of customer service volumes and optimize headcount by 20%.

    04

    Financial Overview and Solvency

    MFSL's revenue, excluding investment income, stood at INR 6,194 crore, an 18% growth, though consolidated profit after tax was INR 86 crore, impacted by new business strains. Gross written premium for Axis Max Life grew 18%, and renewal premium grew 17% to INR 3,873 crore. The embedded value at the end of June was INR 26,478 crore, a 20% growth, with an annualized operating ROEV of 14.3%. The company's solvency ratio stood at a healthy 199% at the end of the quarter.

    05

    Leadership Transition and Regulatory Outlook

    Prashant Tripathy announced his departure as MD & CEO on September 30, 2025, with Sumit Madan set to take over on October 1, 2025. Management expressed confidence in a smooth transition and continued momentum. Regarding the pending insurance bill, it is expected to be presented in parliament, with no changes anticipated to Section 35 that would impact the company's holding structure. Discussions are ongoing with the RBI for Axis Bank to potentially increase its stake by 1%.

    06

    Persistency Trends and Economic Factors

    While 25th-month persistency reached an all-time high of 75%, 13th-month persistency saw a slight dip to 86% from 87% in Q1 FY25. Management attributed this to a combination of overall economic effects on the Indian consumer and a reduction in high-ticket size policies. Efforts are underway to strengthen persistency, with collection trends showing improvement as the quarter progresses.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.