Over next few quarters, Axis Bank will increase stake: Max Life CEO

Life insurers have seen strong growth this year with the economy unlocking and supply-side constraints easing. Against this backdrop, Prashant Tripathy, managing director and chief executive officer, Max Life Insurance Company, in conversation with Subrata Panda talks about the company’s first-quarter (Q1) performance, Axis Bank’s plan to increase stake, and growth targets. Edited excerpts:

How was Q1 in terms of business?

We delivered sustainable growth by building a solid distribution process. Our new business premium increased 20 per cent; annual premium equivalent (APE) increased 15 per cent. Our gross premium grew 18 per cent. The value of new business (VNB) grew 23 per cent — this means we improved our margins and our total assets under management grew 14 per cent.

Our product mix is quite balanced. The participating segment is 17 per cent of our product mix; non-participating savings 27 per cent, unit-linked plans 38 per cent, and protection 18 per cent.

We have been focusing on the retirement space and have started a pension fund management business.

Group protection grew at a faster pace than retail protection. This has been the case with other life insurers as well.

When the country went into lockdown mode, people were fearful and realised the value of protection. They bought a lot of insurance. There is a base effect. Of course, the supply-side constraints have played a vital role as well. I think the base effect is the bigger reason. We will start to see more growth. Max Life is trying to focus on two segments: protection and retirement.

Have term prices stabilised?

As India evolves, we will need to price products for different segments. So far we are pricing products for everybody. I think prices for different segments will start to vary. Rates will also start to differ depending on experience. They will be more dynamic. But I am not anticipating a price rise in the next three/six months at least.

Some life insurers are opting for greater retention on their books.

We increased our retention somewhat. We enjoy the support of our reinsurance partners. We are in a happy place.

Will you tinker with your present-day product mix?

We may increase the share of protection to some extent, especially retail protection, by 1.5-2 per cent every year. Currently, it is close to 8 per cent. Our game plan is to grow a couple of 100 basis points every year.

The other area is annuity. But annuity on an APE basis is a small percentage — maybe 2-3 per cent. We would also like to focus more on non-par savings for their higher margin.

Axis Bank had the option to raise its stake in Max Life. Will it be exercising that option any time soon?

Over the next few quarters, Axis Bank will increase its stake. It holds 13 per cent in Max life. Axis Bank is a very large financial services conglomerate. We will go through the process to increase that to up to 20 per cent. It’s a 12-year-old relationship. It is our largest distributor. The best thing that could happen to Max life insurance was the distribution partnership converting into an ownership.

The Insurance Regulatory and Development Authority of India has provided indicative growth targets to life insurers. Are they feasible?

We have to look at the intent behind the move. When you start to think about aggressive targets, your mind starts to work on how best to meet them. This comes from the vision the regulator has that by 2047, every household must have life/health/home cover. I am sure the industry will work in the most aggressive manner to grow as much as possible.

For the longest time, Max Life has been the fourth-largest life insurance company. How will you look to increase your market share and break into the top three?

That’s definitely a part of the vision. We just embarked on a very aggressive project within the organisation which focuses on three/four areas. We will focus on the online channel because we believe it will be a big growth driver. We want to make a lot of investments in growing our own channels. Leveraging each and every potential that comes available working with Axis Bank as our parent organisation is another area we are focusing on. We have chosen two verticals to work on — one is health protection and well-being, the other retirement. We are firing on all cylinders.

There’s a possibility life insurers will be allowed to sell health indemnity products. Will you consider it?

We are lobbying for that to happen and we will participate. It will take some time to learn because it’s a different segment altogether.

What is the growth target for 2022-23?

Growth is a mixture of how fast APE grows, and how fast VNB grows. We typically target the high-teens to a 20 per cent kind of growth number. We will remain in that band.