Max Financial Services Ltd (MFSL) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to the Max Financial Services Limited Q2 and H1 FY27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nishant Kumar, Chief Financial Officer of Max Financial Services Limited for opening remarks. Thank you, and over to you, sir.
Nishant Kumar (Max Financial Services Limited): Good morning, everyone, and thank you for joining Max Financial's earnings call for the quarter ended September 30th, 2026. Our quarter two FY results have been released and are available on our
Nishant Kumar (Max Financial Services Limited): site, as well as on the stock exchanges. Joining me today are Mr. Sumit Madan, Managing Director and CEO, and Mr. Amrit Singh, Chief Financial Officer of Axis Max Life Insurance. With that, let me hand over the call to Sumit to take you through our performance and key developments during the second quarter of FY '27.
Sumit Madan (Max Financial Services Ltd): Hey, thank you, Nishant. And good morning, everyone. The second quarter of FY '27 was indeed marked by heightened global uncertainty, a changing interest rate environment, and significant regulatory developments for the insurance industry. The proposed changes to commission structure and the expense of management framework have initiated important discussions across the sector, and reinforced the industry's continued evolution towards greater transparency, customer centricity, and operating efficiency. We support the broader objectives of these reforms, including simplified distribution economics, clearer alignment between commissions and expenses, stronger incentives for renewal and persistency, and enhanced protection for policy holders. At the same time, the proposed EOM limits and commission caps represent a meaningful reset of industry business models, particularly coming on the back of several major regulatory changes over recent years. At Axis Max Life, we have consistently focused on building a diversified and a resilient franchise, with balanced growth across channels, products, and customer segments. This has enabled us to navigate periods of change effectively while maintaining the business momentum. We are confident, as with the previous industry transitions, we will adapt successfully to these reforms and emerge much stronger. With that context, let me take you through the key highlights of our performance across our strategic priorities during the quarter. First, like we always say, sustainable and predictable growth. Axis Max Life continued to deliver broad-based growth across both proprietary and partnership channels during the first half of FY '27. Our indiv- our individual adjusted first-year premium grew by 12% in H1 FY '27 and 9% in Q2 FY '27, enabling us to maintain our private market share at 10.1%. More importantly, our performance continues to demonstrate consistency through various market cycles, with a three-year CAGR of 19% in Q2 FY '27, significantly ahead of the industry growth rate of around 11%. Total APE grew by 11% in H1 FY '27 and 8% in Q2 FY '27. Our proprietary channels delivered 9% growth in Q2 FY '27 on a high base, underpinned by a robust three-year CAGR of 25%. Within the proprietary channel, our e-comm business continued to strengthen its leadership position across both direct and aggregator platforms, registering a 29% growth during this quarter. Partnership channels grew by 11% in H1 FY '27 and 8% in Q2 FY '27. Within this, the Axis Bank channel recorded a 4% growth, while our broader retail partnership ecosystem continued to gain scale and momentum, delivering a 19% growth during the quarter. This highlights the increasing contribution of our diversified partner network to our overall business growth. We also witnessed strong traction in the group credit life, with the business growing at 41% in Q2 FY '27. Notably, partnerships on boarded over the last three years have now started to contribute significantly and came in at more than 35% of the group credit life APE, reflecting the success of our efforts to broaden and diversify our growth engines. During the quarter, we continued expanding our addressable market. Our GIFT City proposition gained momentum, enabling seamless digital acquisition of NRI customers, while our distribution ecosystem expanded with five new partnerships. These initiatives further enhanced the resilience of our franchise and positioned us very well to capture the emerging opportunities while reducing the dependence on any one single channel. Second aspect that we've always focused on is product innovation driving margin expansion. Product innovation continues to be a key strategic lever for us, enabling both customer relevance and profitable growth. During the second quarter, our retail product mix remained well diversified, with participating and non-participating savings products contributing 15% each of the retail APE, protection and health 14%, annuity 19%, and ULIP at 37%. This balanced mix reflects the strength of our multi-product strategy and reduces dependence on any one single product category. Retirement, like we mentioned earlier as well, continues to be one of our most exciting growth opportunities. In Q2, we launched Smart Retirement Income
Sumit Madan (Max Financial Services Ltd): lifelong income with a Nifty 50 linked variable annuity option, offering customers the potential to participate in the long-term market growth. The product has been well received and already contributes around 8% of our total APE. Driven by strong customer demand and the success of Smart Wealth, our annuity business grew by 130% during Q2 FY '27. We also continued to strengthen our protection franchise. Pure retail protection grew by 31%, supported by healthy customer demand, while rider growth remained broadly stable amid some softer ULIP market sentiment. During the quarter, we also relaunched the Smart Term Plan Plus with eight flexible protection variants, life cover up to age 100, and enhanced women-centric benefits, including maternity cover and lifetime plus benefits. We maintained our position amongst the industry leaders in protection and remained rank three in individual sum assured, with individual sum assured growing at 18% in FY in H1 FY '27. In addition, we expanded our reach across emerging customer segments. Our USD-denominated smart gift proposition continues to gain strong traction amongst NRI customers, with GIFT City business now scaling up rapidly and contributing more than 5% of the ULIP APE. We also launched innovative group solutions in the credit life segment, further strengthening our product suite. The continued momentum in our protection and retirement business has improved both product mix and profitability. As a result, H1 FY '27, our VNB grew 21% to 1,180 crores, while VNB margins expanded by 210 basis points to now 25.4%. These results reflect the strength of our product strategy and our continued focus on building a high-quality franchise capable of delivering sustainable, long-term value creation. The third aspect, which we always focus with great pride, is around having a customer-centric approach. At Axis Max Life, customer trust remains the cornerstone of our franchise and continues to strengthen across multiple dimensions. During the year, we achieved a distinction of being ranked number one life insurer in customer experience by Hansa Research, improving from our earlier position and reinforcing our commitment to customer obsession. Our net promoter score improved further to 62 from 60 last year, while both touchpoint and relationship NPS continued to strengthen. We witnessed significant improvement in customer service, policy issuance, and purchase journeys through a combination of process simplification, automation, and digital interventions. Claims remain one of the most important moments of truth for an insurer. Our InstaClaim proposition continues to deliver industry-leading outcomes, with 63% of the eligible claims settled within one day and 56% actually settled within three hours itself. These outcomes are supported by ongoing investments in automation, analytics, and a very customer-centric claims process. While the 13th month persistency is at 83% versus 85% last year, we continue to be ranked amongst the top players on NOP persistency across cohorts. Importantly, long-term persistency, including 37th month, 49th month, and 61st month reached their highest-ever level, with a significant improvement year-on-year, clearly reflecting improving business quality and a stronger customer engagement over time. Fourth aspect is around digital digitization for operational efficiency. Digital, data, and AI continue to transform Axis Max Life into a more intelligent, scalable, and a customer-centric organization. Over the last few quarters, we have moved beyond experimentation and are increasingly seeing measurable business outcomes coming from AI. Today, we have more than 47 AI solution tracks and multiple enterprise-wide AI platforms operating across recruitment, sales, underwriting, servicing, and customer engagement. In distribution, our sales ecosystem has become increasingly intelligence-driven. AI-based recruitment generated over 60,000 leads, while our sales copilot supported more than 82,000 sales interactions during the year. AI-powered recommendation engines, personalized nudges, and performance tools are helping improve productivity and sales effectiveness across channels. In customer acquisition and cross-sell, our AI-driven propensity and PASA engines have generated substantial business impact, while our GIFT City digital onboarding platform has enabled rapid scaling of our NRI proposition with a fully digital customer journey now. In underwriting and risk management, AI-enabled models delivered nearly 1,000 crores of risk avoidance through enhanced fraud and mortality detection capabilities. Financial frictionless
Sumit Madan (Max Financial Services Ltd): writing now supports half of our protection business, improving both customer experience and operational efficiency. On the customer side, our app ecosystem continues to scale strongly with over 12 lakh installs, while AI enabled servicing capabilities, CS Copilot, automated email bots, and voice AI platforms are improving the responsiveness, reducing turnaround times, and enhancing an overall customer satisfaction. These investments are increasingly translating into tangible business outcomes through higher productivity, better customer experience, improved risk management, and stronger growth. In summary, I would just like to say our growth continues to be supported by a diversified distribution franchise, strong momentum in protection and retirement segment, industry leading digital capabilities, and a continued focus on customer trust or Bharosa as we say. At the same time, our profitability metrics demonstrated the quality of the business we are building. As the industry adapts to the evolving regulatory framework, we remain very confident in our strategy, execution capabilities, and our ability to continue creating sustainable value for all our stakeholders. I now want to hand over to Amrit, who will provide an update on our financial performance.
Amrit Singh (Max Financial Services Ltd): Thank you, Sumit, and good morning, everyone. Just some housekeeping update on the key financial metrics. MFSL revenues excluding investment income now stands at Rs 17,484 crores, which is also grown by 16%. The consolidated profit after tax at MFSL is now Rs 219 crore, which is up 137%. The gross written premium experienced a healthy growth of 17% and is Rs 18,066 crores for the first half, where the renewal business has grown at 18% to Rs 11,247 crores. Individual new business sum assured, an important metric for us, grew 18% year on year and we are now on individual side, 2.55 lakh crores of sum assured, rank 3 in the private industry, which underscores our continued focus on expanding the protection business and sum assured growth. The growth may appear lower than protection business primarily due to you would have seen in the mix that mix has shifted towards annuities, and annuities do not have sum assured in built into them, and that's the reason why the 18% growth is smaller than the protection business growth. Embedded value of the company as end of September 2026 stands at Rs 31,437 crores, a growth of 17% year-on-year. Annualized operating ROEV has improved by 100 bps to 17.3% in the first half. This includes around a marginal Rs 5 crores positive on the operating variance side. The non-operating variance stands negative at 216 crores largely due to the movements in the interest rates, and this is transitory in nature. We have continued to maintain sharp focus on operational efficiency. Policyholder operating expenses as a percentage of GWP improved by 174 basis points year on year to 13.7% driven by focused productivity enhancement initiatives. If you adjust for GST, which is in the run rate in this particular half, the policyholder Opex ratio is actually improved by 300 basis point to 11.7% in first half FY27 from 14.6% in first half FY26 last year. Overall policyholder expense have grown only by 3% during the first half, and total expenses, including commission, that has grown only by 9%. AUM now stands at 2.06 lakh crores, a growth of 11% year on year. As Sumit mentioned, VNB margins expanded in the first half from 23.3 last year to 25.4 in the current year, a growth of 21%, and for the quarter, quarter 2, the VNB actually stood at 27%, and this is despite the GST impact. Overall, profitability outcomes gives us the confidence that we will be able to maintain our overall momentum for the future. And with that, I'll ask the moderator to open the floor for questions.
Moderator: Thank you, sir. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on your touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Shreya Shivani with Nomura. Please go ahead.
Shreya Shivani (Nomura): Yeah. Thank
Shreya Shivani (Nomura): opportunity and congratulations on a good quarter. I have two questions. My first question is on while the first-half performance on the VNB growth has been strong. If you can help us understand now that protection will have a high base, I mean we already sort of softened on protection 2Q itself, but protection will have a high base in second-half. Non-par will be still keep declining. What kind of APE growth is likely for us in the second-half? Also what kind of VNB margins are feasible, because the kind of the 1H at 25 itself is ahead of what you have historically done. So, some color around how can second half pan out for us in terms of growth, in terms of margins would be useful. My second question is on the EoM caps that have been that have been suggested. So, any color that you can give around on how much will we be able to achieve by just the commissions reducing? What other efforts will we have to make to reach 12.5% EoM over the next five years? What are the suggestions that we are giving to the regulator given we are a retail only life insurer and any, any color on that would be useful. Thank you.
Amrit Singh (Max Financial Services Ltd): Yeah. So, I thanks Shreya. I think three questions. The first one on APE growth. I think the second half presents a kinder base, so we are more confident that we should see an acceleration in the second half. And also, there will be an opportunity which, which a transition always brings about. So, we will capitalize it to the fullest potential. So, we are more confident that APE growth should look better in the second half than the first half. On margins, I think what you're missing out in our margin trajectory is that we do get an advantage of operating leverage. We do report our margin on as is operating expense basis and hence, every quarter, as the sales volumes kind of pick up, the margin expansion also improves. So, even if, you know, some moderation, which may happen because of very high base of protection, the overall margin profiles, the confidence is more positive. And we should continue on this expansion journey that we have experienced so far. Coming to your questions on the, on the consultation paper. Look, this is a consultation paper and we have provided our views on the same to the regulator, as well. And, you know, there will be an active engagement. But at a macro level, the journey for us, which is we are around 25% on expenses of management to GWP ratio, the 15% journey, I think with the mix of, you know, the commissions getting realigned towards renewals than first year as per what has been indicated and some cost actions over the next two and a half years to be taken, we're confident that we will meet it. Relatively, I think if you really ask us that how much is that OPEX to be taken out, it's, you know, maybe a 7% kind of a number that we have to optimize. So, it's 3.5%, 3.5% optimization over two-year periods, which is not, not doable. You would have seen how we have started on the journey and some of the tech investments, etcetera, and the reset of the industry will help us do so. So, we remain confident that we will map, you know, to the guidance on that particular element. But having said, I think a unified single cap is also, you know, has its, I would say pluses and minuses. And we have recommended to the regulator to look it holistically among many other things that we have recommended. Yeah.
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