New Delhi, Delhi, India

• Operating EV grows at annualised rate of 15%
• Structural new business margin at 20%

Max India Ltd. today announced the Embedded Value (EV) for its life insurance business, Max Life, at Rs. 5,363 Cr. as at 30th September 2015, based on Market Consistent methodology. The annualised growth in Operating EV for H1 FY2016 is an impressive 14.8% before accounting for capital movements. The Return on EV (RoEV) is 13.8% over the previously declared EV of Rs. 5,232 Cr. as at 31st March 2015. The Value of New Business (VNB) written during H1 FY2016 is Rs 163 Cr with the new business margin at a strong 20.2%, before the cost overrun, and 17.0%, after the cost overrun. The growth is supported by strong fundamentals both on the existing business as well as a continued focus on new profitable business.

EV and VNB are important metrics for the valuation of a life insurance business as the company is generally valued at a multiple to its EV. For instance, Mitsui Sumitomo Insurance’s investment in Max Life Insurance was at an implied EV multiple of around 3 times.

The EV of a life insurance company comprises two key elements — a) Net Asset Value or the Net Worth of the company, which represents the market value of the company’s assets attributable to the shareholders, and b) the Present Value of the company’s future expected profits from its existing business portfolio as at the date of valuation.

Max Life had transitioned its EV calculation to a Market Consistent methodology from the earlier traditional approach (Traditional Embedded Value - TEV) in FY2015. This follows market practice in developed markets, where life insurers have moved to adopt market consistent methodologies.

A market consistent methodology approach better reflects the embedded value of an insurance company by explicitly allowing for insurance and economic risks rather than using an implicit overall allowance for risks through a Risk Discount Rate (RDR) in the traditional approach. In addition, the market-consistent approach is more objective where asset and liability cash flows are valued using assumptions consistent with those applied to similar cash flows in the capital markets.

About Max Group

Max Group is a leading Indian multi-business conglomerate with a commanding presence in the Life Insurance, Healthcare and Health Insurance sectors. In the financial year 2015, the Group recorded a consolidated turnover of Rs 14,877 Cr. It has a total customer base of over 7.5 million, nearly 300 offices spread across India and people strength of around 17,000 as on 31st March 2015. Max India Limited is a widely held company, listed on the BSE and the NSE. Its founder sponsor Analjit Singh holds 40.5% stake in the company. Other shareholders include some of the world’s best Institutional Investors such as Goldman Sachs, Temasek, IFC (Washington), Fidelity and New York Life.

About Max Life

Max Life Insurance Company Ltd. (MLIC) is a joint venture between Max India Ltd. and Mitsui Sumitomo Insurance Co. Ltd. Mitsui Sumitomo Insurance is a part of MS&AD Insurance Group, which is amongst the leading general insurers in the world. Max Life Insurance, one of India’s leading life insurers, offers comprehensive life insurance and retirement solutions for long-term savings and protection.
A financially strong and stable company with focus on quality of advice, sound investment expertise and service excellence, Max Life Insurance has set in place value-driven culture and corporate governance through its superior human capital. The Company has a countrywide diversified distribution model, including the country's leading agent advisors, exclusive corporate agency arrangement with Axis Bank and several other partners.