Max Life reported robust 1QFY24 results, with a noteworthy 10% y-o-y growth in APE, reflecting an impressive 3-year CAGR of 19%. This accomplishment is particularly noteworthy given the typically subdued performance in this quarter. Additionally, VNB margins experienced a remarkable 110 bps increase y-o-y, reaching 22.2% in Q1FY24, largely driven by a favourable shift in product mix towards non-PAR segments.
As of 1QFY24, the embedded value surged to 169 billion, marking a substantial 20% y-o-y upturn, while the operating ROEV stood at an encouraging 14.0%, witnessing a 50 bps rise y-o-y. In a significant development, the Axis group has expressed intent to elevate its stake in Max Life to approximately 19% from the current 13%, injecting 16.1 billion, subject to requisite approvals from shareholders and regulatory authorities.
Notably, within non-PAR savings, annuities witnessed the highest growth, with a remarkable 3.9x surge over Q1 FY23 levels. The market share distribution for Q1 FY24 stood at 25% for ULIP, 17% for PAR, 19% for protection, 31% for non-PAR (excluding annuity), and 7% for annuity, compared to 38%, 17%, 18%, 25%, and 2% in Q1 FY23.
A significant shift in distribution was observed, with the proprietary channel experiencing strong growth of 23% y-o-y, while sourcing from the Banca channel decreased by 2% y-o-y. As a result, the proprietary channel’s share increased to 39%, up from 34% in Q1FY23, while the Banca channel’s share declined to 59%, down from 65% in Q1FY23.
Management attributed the slower growth in the Banca channel to a high base effect and anticipates this channel, mainly from Axis Bank, to contribute more significantly to growth in the upcoming quarters. Despite a normalising VNB (value of new business) margin of 27%-28% in FY24F from 31% in FY23, we expect APE (annual premium equivalent) growth of 8% with a 5% decline in VNB for FY24F. However, we anticipate a pickup in APE/VNB growth during FY24-26F, with a CAGR of 15% for each of these years.