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HDFC Securities Report
Despite a difficult environment, Max Financial Services Ltd. delivered an annualized premium equivalent (APE) decline of just 3.5% YoY to Rs 6.61 billion but was 3.3% above our estimate.
The share of protection in the mix grew 1,000/1,394 basis points YoY/QoQ to 25.0% as individual/group protection grew 101.9/32.3% YoY. Group protection was driven by higher group term insurance business.
Share of non-participating savings in the mix also improved 300/389 basis points YoY/QoQ to 18.0%. The share of participating and unit linked insurance plan declined as customers chose protection and assured returns.
Value of new business (VNB/VNB) margin were at Rs 1.13 billion/17.1% (Rs (210 million)/(250 basis points) YoY) led by:
- positive business mix and other assumptions (Rs 220 million, up 320 basis points YoY),
- lower interest interests (Rs (260 million), down 390 basis points YoY),
- cost over-run (Rs (120 million), down 180 basis points) and (4) lower APE (Rs (50 million)/NA YoY).
Management stated that it had not passed on higher reinsurance rates on protection and this, along with lower interest rates and an adverse interest rate curve, impacted margins.
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