Max Financial Services Q1 FY27 earnings call

Max Financial Services Limited delivered a robust Q1 FY27, with individual adjusted first year premium growing 17% and overall APE increasing by 15%. This performance outpaced both the private sector and overall industry growth, maintaining a 2-year CAGR of 20%. The company's online business was a key driver, achieving 27% APE growth, while the Group Credit Life segment saw a significant 57% increase, with 45% of this business sourced from new partners.

The company's VNB margin expanded notably from 20.3% in Q1 FY26 to 23.2% in Q1 FY27, translating into a 33% growth in the value of new business. This improvement was attributed to a favorable product mix, particularly protection, and the yield curve. Furthermore, Axis Bank's INR381 crore equity infusion boosted the solvency ratio to a robust 198%, well above the regulatory threshold of 150%, underscoring financial strength and promoter confidence.

Max Life demonstrated improved operational efficiency, with policyholder operating expense as a percentage of GWP decreasing by 185 basis points year-on-year to 16%. This was driven by productivity enhancements across distribution channels and cost control initiatives, leading to only a 7% increase in operating expense despite healthy business growth. The company's Assets Under Management (AUM) also crossed a significant milestone, growing 11% to INR 2.03 lakh crore by the end of June 2026.

The company successfully diversified its online proprietary business, with 45% of Q1 sales originating from outside its largest aggregator, up from 38% last year. This was supported by a strong D2C engine and a healthy mix of customers from Tier 2 and Tier 3 locations across all channels. Max Life continues to invest in these smaller markets, leveraging its brand and product appeal, with 65% of customers at a company level from Tier 2/3 markets and a strong presence through Axis Bank's 2,736 RSU branches.

The annuity business recorded exceptional growth of 116% during the quarter, driven by recent product launches and a favorable base effect. This includes a new variable annuity product, Smart RISE, offering both fixed returns and equity upside participation, which management believes does not bring additional risk to the company. The company also launched Smart Gift Plan (USD-denominated) for NRIs and Aurus for HNI customers, further diversifying its product offerings.

Management acknowledged upcoming regulatory changes, including the implementation of accounting standard 117 by April 2027 and the potential RBC framework, which are expected to enhance capital efficiency. The company recently redeemed sub-debt of INR480-490 crore and plans to raise new sub-debt to replace this and leverage additional debt capacity from the Axis Bank equity infusion, aiming to comfortably maintain solvency above its internal threshold for the next 2-3 quarters.

The company confirmed that detailed regulations for corporate structure simplification have been released, and it is in the process of internal and shareholder consultations. Management reiterated that once a scheme document is filed, the NCLT process is expected to take 6 to 12 months, indicating a clear path forward for this strategic initiative, with all paths now paved for its execution.